Core Viewpoint - The signing of a legally binding memorandum for the "Power of Siberia 2" gas pipeline project between China, Russia, and Mongolia marks a significant diplomatic and economic development, aimed at enhancing energy supply and geopolitical influence in the region [2][4]. Group 1: Project Overview - The "Power of Siberia 2" pipeline will transport 50 billion cubic meters of gas annually from Western Siberia through Mongolia to China, with a contract duration of 30 years [3][18]. - The project has been in discussion since 2015, highlighting a decade-long negotiation process primarily due to pricing disagreements rather than route issues [4][11]. - The pipeline is expected to cost between $10 billion to $14 billion and will span over 2,000 kilometers [18][5]. Group 2: Strategic Importance - The choice of Mongolia as a transit route is strategic for Russia, as it strengthens its influence over Mongolia while providing a new market for gas, given Mongolia's energy shortages [9][10]. - For China, the pipeline is crucial to meet its growing demand for cleaner energy sources, especially as domestic gas production is insufficient [27][28]. - The project is seen as a way to utilize the vast gas reserves in the West Siberian basin, which holds two-thirds of Russia's gas reserves, thus diversifying supply routes and reducing dependency on European markets [20][26]. Group 3: Market Dynamics - China's natural gas imports are increasingly reliant on pipeline gas, with LNG being more expensive and less controllable as a base-load energy source [29][30]. - In 2024, China's LNG imports are projected at 76.65 million tons, while pipeline gas imports are expected to be 55.04 million tons, indicating a shift towards more stable supply sources [28]. - Russia's gas exports to Europe have significantly declined, with only 8.33 billion cubic meters exported in the first seven months of the year, necessitating a pivot towards China as a key market [34][36].