Mongolia still expects the Power of Siberia 2 project – a major new gas pipeline connecting Russia and China – to go ahead despite a turbulent geopolitical situation that could lead to a realignment in relations between Beijing, Moscow and Washington.
The pipeline, if completed, would divert 50 billion cubic metres (1.8 trillion cubic feet) of Russian natural gas per year that previously supplied Europe to China via Mongolia.
But speculation has been growing in recent months that progress on the project has stalled, with analysts arguing that China is reluctant to increase its dependence on Russian energy imports.
Power of Siberia 2 was omitted from the Mongolian government’s 2024-28 work programme, and Chinese and Russian officials have provided few recent updates on the project.
Yet, Mongolia’s first deputy prime minister, Gantumur Luvsannyam, insisted that negotiations over the pipeline were proceeding and that the talks were making progress.
If China and Russia reach a deal and start building the pipeline, we are ready to cooperate and accelerate the project
Gantumur Luvsannyam, Mongolian minister
“The reason why it’s not included in the action programme of the government of Mongolia is because it is an issue that cannot be decided one-sidedly by [the Mongolian cabinet],” Luvsannyam, who also serves as Mongolia’s minister of economy, told the Post in an interview.
“For the project to proceed, China and Russia must first reach an agreement.”
Luvsannyam also stressed the project was not being held up by differences at the political level, but by business concerns held by China National Petroleum Corporation (CNPC) – the state-owned Chinese energy company.
“I imagine that the only issue is CNPC, the buyer, needing to strike a deal on investment and price with the [Russian] supplier,” he said.
President Xi Jinping, Russian President Vladimir Putin, and the then Mongolian head of state first signed a memorandum of understanding to create a China-Mongolia-Russia Economic Corridor a decade ago.
Luvsannyam said the Mongolian government was “currently in discussions with the Chinese National Development and Reform Commission to add two or three projects to the memorandum of understanding” and that those talks would be “finalised soon”.
A first pipeline connecting Russia and China, Power of Siberia 1, has already been completed, and is capable of delivering 38 billion cubic metres of natural gas to northeast China annually. The pipeline has also been extended to supply gas to Shanghai.
But China has been working to diversify its energy supplies in recent years to reduce its risk exposure to any individual market.
Russia was China’s second-largest source of pipelined gas imports last year – its US$8 billion of shipments accounting for 38.1 per cent of China’s total supply. It was also the third-largest supplier of liquefied natural gas to China, providing 10.8 per cent of its total imports.
“If China and Russia reach a deal and start building the pipeline, we are ready to cooperate and accelerate the project,” said Luvsannyam. “The government of Mongolia is committed to advancing this project.”
Chinese officials remain tight-lipped on Power of Siberia 2. In an interview published by China Electric Power News on Tuesday, Liu Hong, director of the National Energy Administration’s petroleum and natural gas department, did not mention the pipeline when listing her department’s major projects for 2025.
On Wednesday, the National Development and Reform Commission stated in its work report at the “two sessions” that China would “practically push forward energy cooperation” with global partners, including the expansion of the Power of Siberia 1 pipeline.
BY:
Kandy Wong returned to the Post in 2022 as a correspondent for the Political Economy desk, having earlier worked as a reporter on the Business desk. She focuses on China's trade

Published Date:2025-03-10