Putin’s Energy Wins in China Deal a Blow to Trump’s Export Push

On his first day in office, President Donald Trump vowed he would establish US energy dominance over the globe. Seven months on, that goal is under threat as the world’s largest importer flexes its economic and geopolitical muscle.

This week, after years of pushing back against Russia’s ambitions for a massive new gas pipeline to significantly expand eastbound exports, China has brought Power of Siberia 2 a step closer to becoming reality. It appears to have agreed to expanded capacity on other routes, too. Days earlier, Beijing made another important concession at Washington’s expense, turning a blind eye to a US-sanctioned Arctic LNG cargo for the first time.

Much of the detail here is unclear. The pipeline agreement, described by Russia’s Gazprom PJSC as a binding deal, has not been confirmed by China, which has used broader language around energy agreements in its official pronouncements. So far only one liquefied natural gas shipment has arrived in Beihai port. Also, China is unlikely to have departed from its eagerness to keep a range of potential suppliers.

But the ties binding Russia to its most important consumer have undoubtedly tightened.

“The geopolitical message is significant,” said Michal Meidan, who leads China research at the Oxford Institute for Energy Studies. “Russia needs buyers for its gas and has long talked up the pivot east, this is a significant outlet for its gas. China is hedging against its exposure to US LNG and to US financial trading architecture.”

An apparent deal around Power of Siberia 2 is perhaps the splashiest outcome of Vladimir Putin’s four-day visit to China. The pipeline is vital to efforts to secure new buyers in Asia after flows to Europe — once Russia’s biggest customer — all but dried up after the invasion of Ukraine in 2022.

Add in the expansion of existing pipelines, also agreed in Beijing, and it is the equivalent of more than 40 million tons per year of LNG that China may no longer require — over half of the nation’s total imports of the super-chilled fuel last year, according to BloombergNEF.

While Gazprom, which will supply the gas through the Power of Siberia 2 pipeline, didn’t say when the link would come online, BNEF says that it is possible it could start after 2030.

“Given that China is the largest importer of LNG, this would turn the LNG market on its head,” Bernstein analysts including Neil Beveridge said in a note. “For LNG projects that are still being contemplated, this would be a big negative.”

The timing of Beijing’s change of heart is no coincidence. A decision to take more Russian gas — or at least to allow for that option — comes after Trump applied sweeping tariffs and Xi retaliated, including with levies on US LNG, and as tensions mount around the Strait of Hormuz, a vital artery for LNG shipments. Persistently high prices, a lingering consequence of the war in Ukraine, haven’t helped.

Chinese buyers have not taken imports of US gas for over six months. That’s the longest streak since the previous trade war, during Trump’s prior stint in office.

For Beijing, Power of Siberia 2 could be vital to that continued ability to pick and choose, depending on the flexibility built into any final agreement with Moscow. The pipeline will be the single largest conduit for gas imports into China, all the more crucial as the European Union seeks to ban Russian imports of the fuel by end-2027.

To get the deal over the line, Russia will likely need to accept very low prices near domestic Chinese levels, together with weak purchasing commitments that increase the risk of the pipeline being underutilized, according to Tatiana Mitrova, a veteran of Russian oil and gas markets now at the Center on Global Energy Policy at Columbia University. “That means profitability is questionable, but for Moscow, showing it still has a large, long-term export outlet matters more than margins.”

All of this means that Russian gas could make up 20% of China’s needs by early-2030s, from about 10% today, according to Bernstein.

Still, the point is to show that China doesn’t need additional US LNG to meet its future demand. And that prospect will rattle the White House and American LNG developers.

“It signals Beijing’s intent to hedge against reliance on US LNG, especially in the context of worsening US–China relations,” Mitrova said.

The message of resilience sent by Russia’s own LNG industry this week has been just as loud, with a maiden cargo from the US-sanctioned Arctic LNG 2 export project docking in China — testing the Trump administration’s appetite for enforcement.

Seaborne shipments are a vital lever in Moscow’s efforts to find new markets. But Novatek PJSC, leading the Arctic operation, has struggled to find a buyer for its shipments since the project was blacklisted in late 2023, even after beginning to use dark-fleet vessels, whose owners and movements are harder to track.

That’s also despite a concerted effort to woo Chinese clients, who, according to people familiar with the matter, were told Trump could ease sanctions on the project in order to advance peace talks in Ukraine.

China’s hesitation only began to fade following Putin’s mid-August meeting with Trump in Alaska, where the Russian leader appeared, diplomatically, to be brought in from the cold. While sanctions on Arctic LNG 2 were not specifically discussed, the leaders did briefly speak about cooperation with Novatek on gas projects in the Arctic, the people said, asking not to be named as the matter is sensitive.

Just hours after those talks, shipments from Arctic LNG 2 began moving. Several vessels loaded with fuel from the facility set a course toward China, as Novatek again pitched the deliveries as something Washington wouldn’t immediately touch.

The breakthrough was confirmed late last week, when the Arctic Mulan tanker unloaded LNG in China just days ahead of Putin’s visit. The shipment was received by a state-owned entity, according to the people. It docked in Beihai, in southern China — a relatively minor port in the grand scheme of the country’s gas infrastructure, minimizing risk in the event of retaliation.

Novatek and Beihai operator PipeChina didn’t respond to requests for comment. The US Treasury declined to comment. The Trump administration hasn’t yet publicly responded to the recent gas developments.