Russia and China are moving closer together. With the new Power of Siberia 2 gas pipeline, the chapter of Russian supply dependence on Europe is temporarily ending, while Europeans continue to rely on sanctions.

September 2, 2025, will likely go down in history as another milestone in a geostrategic realignment. On that day, Russia and China signed the Memorandum of Understanding (MoU) for the Power of Siberia 2 pipeline project. This pipeline, which will run across Mongolia and has already received the green light from Ulaanbaatar, is expected to transport 50 billion cubic meters of gas from Russian Arctic fields to China starting in 2030.

For comparison: this volume is roughly equivalent to the gas supplied to Germany before the Ukraine war, when peak deliveries reached around 55 billion cubic meters.

Russian President Vladimir Putin emphasized that China would benefit from market-based gas pricing. He called the project “mutually beneficial” and “one of the largest energy projects in the world”.

One of the Largest Projects Today

Indeed: with a projected investment of $13.6 billion, this pipeline project ranks among the largest global energy infrastructure investments currently underway. In the past, such projects were typically fully financed by Russian gas giant Gazprom. In this case, however, it is likely a joint financing effort, also involving Chinese company China National Petroleum Corporation (CNPC). It is assumed that China, in exchange for a long-term import guarantee, receives significant discounts from Gazprom and is directly involved in financing the Chinese section of the pipeline.

EU Moves to Cut Ties

While Russia is turning to its southeastern partners with maximum urgency, the European Union seeks full independence from Russian energy imports. The 19th sanctions package is currently outlining a phased exit. According to the plan, all oil and gas imports from Russia to the EU are to be fully banned by 2027/2028. This is expected to cause significant friction, especially with Hungary, which currently sources roughly 75% of its natural gas, 86% of its oil, and 100% of its nuclear fuel from Russia.

Until then, transitional arrangements, price caps, and import restrictions are in place to ensure supply security. The goal is to permanently end dependence on Moscow while keeping European energy markets stable.

Currently, the EU imports about 58% of its energy, with Russia being the main fossil fuel supplier before the Ukraine war. In 2022, EU energy import dependency stood at 62.5%.

Russia Losing Market Share

In 2021, before the Ukraine war, Russia had established itself as the EU’s dominant energy partner. About 40% of the EU’s gas demand, 27% of oil, and 45% of coal imports came from Russian sources.

With the start of the Ukraine war in 2022, this situation changed dramatically. The EU quickly diversified its energy sources, increasing LNG imports from the US and Qatar and reducing dependence on Russian supplies. As a result, the share of Russian energy in total EU imports fell to about 15–20% for gas by 2024, while oil and coal were almost completely removed from the supply chain.

The consequence was a sharp surge in industrial electricity prices, accelerating deindustrialization in the EU’s industrial core regions—especially in Germany.

Russia Reorients

Since 2021, Russia’s energy export strategy has fundamentally shifted, with China taking a central role as its new main buyer.

In 2021, the EU was still Russia’s largest energy customer, accounting for about 80% of pipeline gas exports and over 40% of LNG. After the Ukraine war began in 2022 and sanctions were imposed, the EU’s share of Russian energy exports fell sharply. By 2024, the EU imported only about 15% of its gas from Russia.

China, in contrast, has significantly increased its share of Russian energy exports. From late 2022 to July 2025, China purchased roughly 47% of Russian crude oil, 44% of coal, and 21% of LNG, securing its growing stake in Russian energy trade. For pipeline gas, China’s share was about 30%.

Projects like the planned Power of Siberia 2 pipeline are cementing this development.

US Benefits

Faced with massive sanctions, Russia has temporarily freed itself from European energy dependence. The massive infrastructure investments make a quick reversal virtually impossible—regardless of political developments.

Certainly, the shift from high-priced, purchasing-power-rich Europe to the negotiation-savvy Chinese market has squeezed margins for Russian energy companies. Nevertheless, Russia’s integration into Asian value chains stabilizes the business long-term and positions it for expansive growth along the dynamic Asia-Pacific economy.

The United States is reaping considerable benefits from this new reality: it is filling the emerging supply gap with significantly more expensive LNG, which Europeans recently secured under a trade deal with US President Donald Trump.

The agreement stipulates that by 2026, the EU will import $250 billion annually in energy products from the US, a significant increase from current levels. However, this target may be unrealistic—the EU economy would likely never be able to absorb a tripling of energy imports economically, let alone store them efficiently.

Under a trade agreement with the US, the EU has committed to importing a total of $750 billion in energy products—including LNG, crude oil, and nuclear fuel—by 2028. The partners are now approaching final signing.

Geopolitical Drift

Power of Siberia 2 symbolizes the current geopolitical drift, signaling a shift of power away from the old European center. Russia and China are increasingly intertwining their economic destinies, accelerating BRICS integration.

At the same time, the EU is increasingly marginalized as a market for Russian exports, while China continues its export offensive, flooding the continent with cheap steel, automobiles, and consumer goods. In this context, the EU Commission’s political inaction becomes glaringly obvious.

Energy dependence remains Europe’s Achilles’ heel. Recent political decisions—the nuclear phase-out, the end of highly efficient coal power, and the demolition of all bridges to Moscow—appear all the more grotesque. Generationally accumulated prosperity has blinded Europeans to fundamental economic realities—especially the central role of a stable, affordable energy supply in producing high-quality industrial goods, the indispensable foundation of growth and wealth.

The time has come for a new atlas design, with the Pacific at the center of the action.

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Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination. Follow him on Twitter/X: https://x.com/ThomKolbe.