Russia and China have signed a legally binding memorandum for the construction of a new gas pipeline through Mongolia to China.

Alexei Miller, the head of the Russian Gas Industry (Gazprom), made the announcement in Beijing on Tuesday.

The price of gas supplied via the Power of Siberia 2 pipeline would be lower than for Europe, Miller noted, citing reduced transport costs.

Gazprom and the China National Petroleum Corporation also signed documents to increase gas deliveries through the existing Power of Siberia pipeline from 38 billion cubic meters per year to 44 billion cubic meters.

The 6,700-kilometre-long Power of Siberia 2 pipeline, which includes 2,700 kilometres on Russian soil, is expected to have a capacity of 50 billion cubic metres per year.

The contract is set for 30 years, according to the Russian reports.

Miller described the pipeline as the “largest, most extensive and capital-intensive gas project worldwide,” without giving details on the costs.

Estimates suggest it would cost tens of billions of dollars.

The announcement follows a meeting between Russian President Vladimir Putin, his Chinese counterpart Xi Jinping, and Mongolian President Ukhnaagiin Khürelsükh in Beijing.

The timeline for constructing the new pipeline remains unclear. Negotiations on the Power of Siberia 2 pipeline have been ongoing for five years, with Moscow and Beijing unable to reach an agreement on the price.

Having largely lost the European oil and gas market following Russia’s full-scale invasion of Ukraine, Moscow has been pressured by China to offer hefty discounts.

The media also reported that Beijing wanted to pay domestic Russian gas prices. The talks stalled several times.

However, another report said, the recent conflict between Israel and Iran, including U.S. attacks on Iran, has reignited Chinese interest in the project, due to concerns about supply security from the Middle East.  

(dpa/NAN)