By Avi Salzman

Russia is expanding its natural gas pipeline network into China, a move that could challenge America's growing business of shipping liquefied natural gas.

Russian energy company Gazprom said on Tuesday that Russia had signed a binding deal to build a pipeline from Russia to China through Mongolia. The pipeline, known as Power of Siberia 2, would be able to transport as much as 50 billion cubic meters of gas a year. The first Power of Siberia pipeline, from Siberia to China, transports about 38 bcm a year and could be increased to 44 bcm.

Together, the pipelines create competition for exporters of liquefied natural gas, who today send about 600 bcm a year around the world.

The U.S. is the fastest-growing exporter of LNG, and companies are planning to send much more gas to Asia over the next few years. But competition from Russia could make that harder.

"[Russia could add] almost 60 bcm of additional pipeline capacity to China, giving a major blow to the LNG industry right before the largest expansion ever seen," wrote Anne-Sophie Corbeau, a research scholar at Columbia University's Center on Global Energy Policy.

U.S. companies with exposure to LNG include Cheniere Energy, Venture Global, New Fortress Energy, NextDecade, Exxon Mobil, and Baker Hughes.

The Russia-China deal might mean that U.S. exporters send fewer cargoes to China in the future. But American exporters still have plenty of available markets. For one thing, the U.S. has already vastly increased its shipments to Europe, which used to get most of its natural gas from Russia before the war in Ukraine. The U.S. is expected to increase its European exports more in the years ahead, though Asia is still expected to account for the lion's share of LNG growth over the next decade.

Write to Avi Salzman at avi.salzman@barrons.com

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September 02, 2025 16:35 ET (20:35 GMT)

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