Future murky for Russia-China pipeline as Mongolia omits project from long-term plan

Mongolia, essential to the Power of Siberia 2 gas pipeline, has left the project out of a long-term plan, suggesting work will be delayed

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The Power of Siberia 2 gas pipeline project remains in a holding pattern as Russia, China and Mongolia have not finalised the details necessary for construction to begin. Photo: Getty Images

Published: 4:00pm, 19 Aug 2024Updated: 9:01am, 21 Aug 2024

Mongolia has not included the Power of Siberia 2 natural gas pipeline connecting Russia and China in its action programme through 2028, a decision interpreted by many as a shelving of the controversial project that could have provided Moscow with a financial lifeline as it grapples with sanctions and the ongoing war in Ukraine.

The landlocked country would cover much of the proposed route for the 2,594km pipeline, necessitating its involvement in construction and transmission fee negotiations.

The programme was announced last Friday by Mongolia’s “national unity” coalition government, whose three parties hold 118 out of 126 seats in the State Great Khural – the country’s parliament – following elections in June.

Analysts attributed the hiatus to pricing disagreements between Beijing and Moscow as well as geopolitical factors, with concerns over secondary sanctions from Western countries levied against those seen as aiding Russia’s military in Ukraine.

“We are entering a long pause, where Moscow no longer believes it can get the deal it wishes from Beijing and will probably park the project until better times,” said Munkhnaran Bayarlkhagva, a former official at the National Security Council of Mongolia.

Bayarlkhagva said that Beijing may not be happy with Gazprom – Russia’s state energy giant – over a perception the company wishes to “unilaterally” control the Mongolian section of the pipeline.