An ambitious energy project in central Asia was unveiled this week at the Shanghai Co-operation Organisation summit in Tianjin.

On the sidelines of the gathering, Gazprom, Russia’s largest oil and gas company, and China’s National Petroleum Corporation (CNPC) signed what Moscow described as a legally binding memorandum to advance the Power of Siberia 2 (PS-2) pipeline, a 50 billion cubic meters (bcm) a year route from Western Siberia to China via Mongolia. While the Kremlin confirmed a package of agreements, Beijing avoided specifics, with its Foreign Ministry directing queries to “competent authorities.”

For Russia, the deal is a structural pivot eastward. Once reliant on European buyers, Moscow lost that market when sanctions and the war in Ukraine disrupted trade. At full capacity, PS-2 would still fall short of the 177 bcm Europe once imported annually, but it provides a replacement outlet and cements dependence on Chinese demand. Gazprom acknowledged that pricing and financing remain unresolved, with Gazprom chief Alexei Miller signaling Chinese buyers will pay less than Europe ever did. That blend of strategic relief and commercial strain explains why Gazprom’s shares tumbled after the announcement.

For China, the proposed pipeline is both insurance and leverage. It would secure long-haul pipeline gas alongside the original Power of Siberia, which Russia says will rise from 38 to 44 bcm a year, and reduce exposure to volatile LNG markets. Yet by withholding public commitment on terms and timelines, Beijing shows it holds the upper hand in negotiations. The political choreography of Xi Jinping and Vladimir Putin speaking of “old-friend” ties underscored the symbolism, but China’s diplomats have stayed deliberately vague.

Mongolia, for its part, stands to collect transit fees and develop infrastructure. The country’s Prime Minister, Ukhnaagiin Khürelsükh, called the cross-border Soyuz Vostok section a “millennium-scale project,” reflecting the scale of the gamble for his landlocked nation.

For Europe, the implications are geopolitical rather than immediate. Brussels is already reducing dependence on Russian energy, but PS-2 would redirect flows once central to European industry toward Asia instead, hard-wiring Sino-Russian interdependence at Europe’s expense. Until contracts and commissioning dates are disclosed, the project remains aspirational, yet the signal is unmistakable: Moscow and Beijing are knitting themselves closer while Europe is left outside.