Mongolia Eyes Transit Gains as Power of Siberia 2 Moves Forward

The agreement to advance the Power of Siberia 2 gas pipeline, announced at a trilateral summit in Beijing on September 2, is the most concrete step yet in a project long stuck in limbo. Russia, China and Mongolia pledged to move ahead with construction of the line that would carry up to 50 billion cubic meters of gas annually from western Siberia through Mongolia into northern China.

For Russia, the plan is a lifeline. Since the loss of its European market, Moscow has been pressing to reorient its energy exports eastward. For China, the appeal lies in secure overland supplies that reduce reliance on liquefied natural gas from the United States, Qatar and Australia. Mongolia stands to gain from transit fees, alternative energy supplies that could ease Ulaanbaatar’s winter smog, and the prestige of serving as a corridor linking Russia and China.

Yet the breakthrough is less decisive than the summit headlines suggest. The “memorandum of construction” signed by Russia and China is legally binding but thin on detail. Key terms like pricing, take-or-pay obligations, financing and the project schedule remain unsettled.

Gazprom chief Alexei Miller acknowledged as much, noting that negotiations now turn to commercial arrangements. Chinese officials, for their part, have been subdued in public statements, underlining the caution with which Beijing approaches large energy deals.

That caution reflects China’s strong bargaining position. With Russia desperate for customers, Beijing can dictate favorable pricing and flexible volumes. It also has other options, from expanding renewables to tapping LNG markets, which weakens Moscow’s leverage. Some analysts have described the announcement as more political signal than commercial certainty.

The geopolitical framing is blunt. Xi Jinping called for the three countries to resist “external interference,” a phrase clearly aimed at Washington and its allies. The Kremlin is casting the pipeline as proof that sanctions cannot exclude Russia from global energy markets.

For Mongolia, the economic stakes are real. Transit revenue could support strained public finances, and the infrastructure upgrades tied to the project would improve connectivity. The government is eager to secure a long-term role in the China-Russia trade corridor, competing with Central Asian countries. But closer integration with China and Russia also sharpens old dilemmas. Mongolia depends heavily on Russian fuel imports and Chinese markets for its minerals. Adding a gas pipeline reinforces that dependence at the expense of policy autonomy.

Timing adds further uncertainty. Chinese gas demand is slowing amid weaker growth and a shift toward renewables. Western sanctions on Russia complicate financing. Domestic politics in Mongolia could complicate matters, with public skepticism and concern about dependence on Russia and China remaining high.

Two scenarios stand out. In one, Power of Siberia 2 proceeds smoothly, Mongolia secures reliable transit income, and its role in regional energy flows enhances its diplomatic leverage. In the other, disputes over pricing or shifts in demand delay or derail the project, leaving Mongolia more exposed to its neighbors’ pressures but without the promised benefits.

The Beijing summit marks movement where many expected a stalemate. Whether the pipeline becomes a transformative asset or another unrealized ambition will depend on the hard bargaining ahead. Mongolia has a place at the table, but the cost of that seat may be measured in how much freedom it retains once the gas begins to flow.