Russia–China Gas Pact Reshapes Global Energy Order

The recently signed Power of Siberia 2 pipeline agreement between Presidents Vladimir Putin and Xi Jinping may prove to be more than just a trade deal—it could redefine the future of the global natural gas market. For Russia, it secures a vast new outlet for its gas exports. For China, it guarantees long-term, low-cost supplies to fuel its economic growth. For the U.S. and Europe, however, it complicates energy security and competitiveness.

The project, long on the drawing board, will eventually supply China with over 100 billion cubic meters of gas annually once completed. That volume mirrors the amount Russia initially planned to ship to Europe through the now-stalled Nord Stream 2 expansion. But with the EU vowing to phase out Russian energy within two years, Moscow has found in Beijing not only a replacement buyer, but arguably a more strategic partner.

This pivot leaves Europe in a bind. The continent has turned to U.S. liquefied natural gas (LNG) and other alternatives to plug the gap, but the cost disadvantage is stark. Transporting LNG across the Atlantic, along with the high energy intensity of liquefaction, makes American gas significantly more expensive than pipeline deliveries from Russia—or even Norway. The result: Europe shoulders higher energy bills, while China locks in cheaper supplies, boosting the competitiveness of Chinese industries on global markets.

For Washington, the pipeline deal also undercuts its “energy dominance” agenda. The Trump administration has championed U.S. LNG exports as both a geopolitical tool and an economic driver, with Europe emerging as the largest buyer. Yet as China deepens ties with Russia, U.S. exporters face the prospect of being locked out of the world’s largest growth market for gas.

Meanwhile, domestic U.S. dynamics complicate matters further. A surge in demand from data centers and AI-driven industries has pushed domestic gas consumption upward for the first time in years. As more supply is soaked up at home, export prices are likely to rise—making LNG even less affordable for Europe.

For the European Union, this creates a structural disadvantage that could outlast today’s geopolitical tensions. Higher energy costs translate into weaker competitiveness for European manufacturers compared to their Asian rivals. Governments, already spending billions to subsidize households and industries through the energy crunch, face an unsustainable fiscal squeeze.

From a global perspective, the Russia–China deal cements a shift in the natural gas trade: Russia reorients its flows eastward, China secures a long-term edge in industrial costs, and Europe becomes increasingly reliant on expensive LNG. Unless Europe diversifies toward cheaper pipeline options—perhaps from Central Asia—its energy crisis risks becoming permanent.

The U.S. LNG boom continues, but without access to China and with rising domestic demand, its room to maneuver could narrow. In the long term, the Power of Siberia 2 pipeline is more than infrastructure—it’s a strategic realignment that may signal a new “gas world order.”