In a notable development this past summer, Russia and China significantly enhanced their energy partnership, driven more by geopolitical strategy than economic necessity. This shift is expected to have profound implications for international relations, particularly for China, somewhat less so for Russia, but especially for the United States. The deepening ties between Beijing and Moscow, often referred to as a “no-limits” friendship, have now been solidified for the foreseeable future.
Beginning in late August, China commenced receiving shipments of liquefied natural gas (LNG) from Russia at a relatively obscure port. This, alongside Russia’s announcement of a significant increase in its gas pipeline exports to China—particularly through the long-anticipated Power of Siberia 2 pipeline—signals a robust and enduring alliance between the two nations.
The recent LNG shipments are particularly controversial as they originate from the Arctic LNG 2 project, which has faced crippling U.S. sanctions that prevented any gas deliveries since its completion two years ago. U.S. President Donald Trump has previously criticized India for engaging in Russian energy purchases and has made efforts to persuade Europe to reduce its dependency on Russian resources. However, China appears to be stepping in as a crucial lifeline for Russian energy initiatives that lack alternative markets. So far, at least seven tankers laden with sanctioned Russian gas have docked at a Chinese port that does not even require the gas, suggesting a strategic maneuver to test U.S. resolve regarding secondary sanctions on Russian energy exports.
Jack Herndon, a senior analyst at the Center for European Policy Analysis, remarked, “China seems to have a get-out-of-jail-free card regarding U.S. Russia-related energy sanctions. I think China believes it has the upper hand, particularly as Trump seeks a trade agreement, leading them to feel confident in their position for the time being.”
However, the future of regular LNG shipments from the Arctic remains uncertain due to winter constraints and a shortage of ice-class tankers to navigate the harsh conditions. If these shipments become routine in the spring of next year, especially if they expand to multiple ports, the significance of this partnership will grow, according to Michal Meidan, who leads the China energy program at the Oxford Institute for Energy Studies.
Meidan pointed out that while the volumes of LNG currently being traded are not substantial, they are beginning to accumulate. China’s apparent defiance of U.S. threats regarding secondary sanctions contrasts sharply with its historically cautious approach to dealing with sanctioned nations. For instance, Chinese imports of Iranian oil are often routed through “teapot” refineries that allow Beijing to disavow responsibility or are structured to avoid the global financial system’s sanctions.
When viewed alongside new pipeline plans that promise to secure affordable natural gas for years to come—priced in rubles and yuan—it becomes evident that China is strategically positioning itself. “This is an optionality play,” Meidan explained. “The Arctic LNG and the potential Power of Siberia 2 project could provide China with a significant portion of its gas supplies, insulating them from global market fluctuations and foreign currency dependencies.”
Since February, China has not purchased any LNG from the U.S. due to ongoing trade tensions. However, its deepening relationship with Russia is unlikely to drastically impact an export sector that Trump aims to boost, particularly as his trade framework suggests that increased U.S. LNG must ultimately reach European markets.
For Russia, finding a buyer for its previously stranded LNG is a welcome development, especially as Europe becomes increasingly serious about reducing its own purchases of Russian energy. Even Russia’s traditional allies, like Hungary, are diversifying their energy imports. The extent to which Chinese purchases can revitalize Russia’s ambitions for seaborne gas exports is still uncertain, but the alternatives are limited.
Recent announcements regarding pipeline expansions reflect a longstanding anticipation. Russia plans to boost gas deliveries to China through existing infrastructures, particularly the Power of Siberia 1 pipeline, a pivotal energy collaboration that emerged as Russia pivoted eastward following a decline in European demand. Of notable interest is the potential construction of Power of Siberia 2, which has been discussed for a decade and may finally materialize, although Russia claims it is nearly finalized while China remains silent on the matter.
Nevertheless, a closer energy relationship with China does not resolve all of Russia’s challenges. The expansion of the existing Siberian pipeline primarily reallocates gas already designated for Asia rather than addressing the surplus gas in western Siberia that Europe no longer purchases. Gazprom, the major Russian gas corporation, has struggled to recover from significant losses and is now facing uncertain profits, with sales to China being a partial lifeline.
From Russia’s perspective, the downside lies in China’s negotiating power, which will likely lead to discounted rates for piped gas. As Meidan notes, “Russia’s pivot to the East was a foregone conclusion, given the anticipated decline in European demand, which has only been accelerated by the invasion of Ukraine. Their hope for Power of Siberia 2 to act as a lifeline hinges on a market that is now solely dependent on China.”
One concerning aspect of China’s new energy agreements is the potential trade-off of energy diversification for increased dependence. Meidan estimates that by 2035, China could source as much as 40 percent of its natural gas from Russia through LNG and expanded pipeline trade. China may perceive its strengthened position in this bilateral relationship as an opportunity for resource extraction rather than dependency.
In sum, the convergence of energy deals, the recent summit between Russian President Vladimir Putin and Chinese President Xi Jinping, and the growing collaboration within the Shanghai Cooperation Organization all suggest a deepening, albeit unequal, alliance between China and Russia. The dream of leveraging closer ties with Russia to isolate China, as envisioned by Trump, now seems increasingly implausible, overshadowed by the vast network of pipelines and LNG shipments linking the two nations.
As Meidan aptly stated, “It does feel like the Chinese have become more willing to commit to supporting Russia.”
