Gas pricing negotiations between Russia and China over the second Power of Siberia pipeline (POS2) have collapsed, and the gap between the two sides is stark: China reportedly offered just $50 per 1,000 cubic meters, while Russia asked for $250, according to Korean market commentator Meru. The numbers matter because $50 doesn't come close to covering Russia's own delivery cost. Gas from Russia's Yamal fields is estimated to cost around $125 per 1,000 cubic meters to pipe to China, so China's offer sits at well under half of what it would cost Russia just to deliver the gas, let alone turn a profit. By comparison, China currently pays Russia around $259 for gas flowing through the existing Power of Siberia 1 pipeline, Gazprom charges other international buyers an average of around $420, and China's own LNG import price from suppliers like Qatar runs around $370. Russia's $250 ask, in that light, looked like a reasonable middle ground, not an aggressive number.
Meru links the breakdown to an unrelated dispute: a rail bridge over the Tumen River, which separates China from North Korea near where China's territory reaches close to the Sea of Japan. China has long wanted better access to the sea through this route, and has pushed for the bridge, completed in April 2026, to open for larger ship traffic. Russia has been slow to finish the approach roads and customs facilities on its side, and North Korea reportedly suspects Russia is dragging its feet out of deference to China's own sensitivities. Meru's theory is that China's rock-bottom gas offer may be a form of pressure or retaliation tied to that frustration, though he is careful to say the real motive is unknowable from outside.
This is just tough commercial negotiating over a long-term energy contract.
The gap is too extreme for pure hardball, and may signal China's displeasure over an unrelated bridge dispute.
The stakes are asymmetric. Russia's pipeline exports to the European Union have shrunk from around 150 billion cubic meters a year before 2022 to under 25 billion, and the EU has committed to ending Russian LNG imports by the end of 2026 and all Russian gas imports by October 2027. That leaves China as Russia's dominant remaining buyer for gas that, unlike LNG, cannot easily be rerouted to another customer once a pipeline is built. China, which can still buy LNG elsewhere at a higher price, has less urgency to close the deal quickly.
Why it matters · The breakdown matters because Russia has few alternative buyers left for pipeline gas as European exports collapse, meaning China holds unusual leverage in the talks, with knock-on effects for global gas and LNG pricing.
Worth asking · Is China's $50 offer just hardball negotiating, or a political signal tied to the Tumen River bridge dispute?