This week's announcement of a massive new gas pipeline to be built between China and Russia is a "geopolitical chess move" that may see China as the biggest beneficiary of the Ukraine war, Russia with a major new customer, and U.S. energy companies with a surplus of liquefied natural gas export terminals - if the deal actually happens - Semafor energy editor Tim McDonnell said in an analysis.
The pipeline, known as Power of Siberia 2, would be able to transport as much as 50B cm/year of gas - on top of the first Power of Siberia pipeline, from Siberia to China, which transports 38B cm/year and could be expanded to 44B cm/year.
The pipelines would create competition for LNG exporters, which currently send ~600B cm/year around the world; the U.S. is the fastest-growing LNG exporter, and companies want to send much more gas to Asia, but more Russian gas could make that goal more difficult to achieve.
When Russia's President Putin met President Trump in Alaska last month, it looked like a chance for Putin ease back into Western energy markets that began to exclude him after the 2022 invasion of Ukraine, but instead, his agreement on the new pipeline showed he prefers Russia's long-term relationship with China, McDonnell wrote.
For China, which already has suspended LNG imports from the U.S. for now, a huge new Asia-bound pipeline from Russia would give it important leverage in future LNG negotiations, and increase the entire region's access to piped gas - not good news for U.S. exporters - McDonnell said.
Chinese officials were notably more vague than Putin about the exact nature of the agreement, and the vital issue of gas pricing has not been resolved, prompting doubts about whether the pipeline actually will come to fruition.
Among U.S. companies with exposure to LNG: Cheniere Energy (NYSE:LNG), Venture Global (NYSE:VG), New Fortress Energy (NASDAQ:NFE), NextDecade (NASDAQ:NEXT), and Exxon Mobil (XOM).
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