In a joint statement, Putin and Xi also addressed the US blockade of Iran and the two closures of the Strait of Hormuz. They also condemned US efforts to deploy weapons systems in space.

A Strategic Shift for Beijing

Russia and China are trading partners across an extraordinarily wide range of sectors, but Beijing had been reluctant to tie itself too closely to Russian energy supplies, analysts said. Supplies from Yamal would account for as much as 12% of China’s consumption in 2025 if the Power of Siberia 2 pipeline is launched.

After the disruption to global trade routes caused by the US-Israeli war against Iran and the subsequent blockade of Hormuz, Beijing cannot rely on supplies from the Middle East at the moment. In particular, tanker exports from Qatar, the Emirates and Saudi Arabia have caused price rises and growing concerns across the sector and the world economy.

During the war, Tehran offered to link up with a Central Asian pipeline system through which China imports energy. The plans remain at the negotiation stage, however, and China still relies on seaborne supplies.

That is probably one reason why Beijing accepted the preliminary deal on the Power of Siberia 2. Initial negotiations stalled over price, but state-owned Gazprom and China National Petroleum Corporation (CNPC) committed to advancing the project a week before Putin’s visit.

China reportedly wanted the new pipeline’s pricing terms to match Russia’s domestic rate of about $120–$130 per 1,000 cubic meters. Moscow, however, is seeking terms closer to those for Power of Siberia 1, which would more than double the amount, according to CNBC.

In the first quarter of this year, Chinese imports of Russian gas rose 35% year on year, according to CNBC.

Dependence on a Single Buyer

Russian gas and oil exports to Europe have almost stopped since the invasion of Ukraine in February 2022, with exemptions negotiated at the European Union level mainly by Slovakia and Hungary. From 2028 onwards, those are also set to end through the RePowerEU instrument, which will cause a further drop in Gazprom’s revenues.

The state-owned gas giant saw exports to the West fall by 44% last year, reaching their lowest level in decades. But Power of Siberia 2 would also make Moscow dependent on a single buyer, while Beijing would trade the uncertainty of Hormuz for dependence on Russian supplies.

Michael Feller, chief strategist at the consultancy Geopolitical Strategy, told CNBC that the deal would mark more than a commercial breakthrough.

“The deal would signal not only trust but also a decision that interdependence is safer than the alternative”, he said. “For the rest of the world, it would mean that Sino-Russian relations would be harder to disrupt.”

(sab)