Russia and China have locked in the route for the Power of Siberia 2 natural gas pipeline, a key piece of their push to move energy trade away from the U.S. dollar. The agreement was announced jointly by the two countries, though no specific timeline for construction or capacity was released.
Route finalized after years of talks
Negotiations over the pipeline's path dragged on for years, with both sides haggling over pricing and transit terms. Now that the route is settled, the project can move toward the engineering and permitting phase. The pipeline will carry gas from Russia's Yamal Peninsula to China, crossing Mongolia along the way.
The route decision clears a major obstacle. Without it, no construction could begin. The deal also signals that both governments are willing to push past earlier sticking points, though details on the final price formula and annual volume remain under wraps.
De-dollarization at the core
Power of Siberia 2 isn't just about energy — it's also a tool for reducing reliance on the dollar in international settlements. Russia and China have been working to settle oil and gas deals in rubles and yuan, and this pipeline is expected to accelerate that shift. By locking in a route, the two countries are betting that physical infrastructure can underpin a financial realignment.
The move comes as Russia faces tightened Western sanctions and looks to deepen ties with Beijing. China, meanwhile, sees the pipeline as a way to diversify its energy imports away from sea lanes that could be disrupted in a conflict.
With the route set, the next steps involve securing financing, awarding construction contracts, and setting a firm start date. Neither side has publicly committed to a year for first gas flows. Analysts following the project expect a multiyear build-out, but the fact that both countries have now signed off on the path suggests serious momentum.
For now, the pipeline's exact capacity and the final pricing mechanism remain undisclosed. Those numbers will determine whether Power of Siberia 2 lives up to its promise as a dollar-free energy corridor — or falls short of the ambition.
