Putin's visit to China set to keep gas deals and trade flows in focus

Russian President Vladimir Putin's state visit to China on May 19-20 is putting bilateral gas cooperation back at the center of market focus, with participants watching for signs of movement on the long-awaited Power of Siberia 2 pipeline and for clues on whether rising Russia-linked LNG flows into China can evolve into a broader pillar of supply cooperation.

"The signing of POS2 continues to be determined by the usual factors, including geopolitical tensions in the Middle East, energy security considerations, US-China relations, negotiations over commercial terms, and the risk of overdependence on a single supplier," said Eric Yep, principal analyst of First Take Gas at S&P Global Energy.

The summit comes with geopolitics reshaping gas trade flows into Asia.

The war in the Middle East has disrupted Qatari LNG deliveries to China, while tightening sanctions pressure on Russian LNG is accelerating Moscow's search for Asian outlets, trade sources said.

Adding a major new variable to this mix is US President Donald Trump's visit to Beijing last week.

There have been few details on the visit's outcomes, but ahead of Trump's arrival, the topic of China's 25% tariff on US LNG was again in focus.

If Beijing were to remove its 25% tariff on US LNG, Chinese buyers could quickly resume imports of US cargoes, fundamentally altering their supply options.

Against this backdrop, the key question for the global gas market is whether China's immediate need to replace disrupted Middle Eastern supply would translate into faster progress on long-term gas cooperation with Russia, or whether the potential return of US LNG will instead give Beijing more room to slow-walk negotiations on the planned 50 billion cubic meters/year Power of Siberia 2 pipeline, analysts said.

China is also looking to home-grown energy. "One of the underappreciated factors is the rapid growth of renewables and battery technologies that reduces China's long-term gas dependence," Yep said.

Russia vs US supplies

China's current supply picture has tightened significantly.

The Middle East conflict effectively halted Qatari LNG deliveries to China in April -- a major blow considering Qatar accounted for roughly 28.4% of China's total LNG imports in 2025, according to Chinese customs data.

This disruption has forced Chinese buyers back into the spot market ahead of peak summer demand, supporting spot prices and pressuring the economics of gas-fired power generation and industrial users.

Initially, Russia appeared best positioned to fill this gap.

Russian LNG deliveries into China have been rising since March, and with the Arctic navigation season opening, trade sources expect additional Russia-linked cargoes, including volumes associated with the sanctioned Arctic LNG 2 project, to flow into China.

However, the prospect of a US-China tariff rollback could change the equation.

Chinese importers hold substantial long-term offtake contracts with US LNG facilities. Under the 25% tariff regime, these volumes were largely swapped or resold into Europe and other Asian markets. If the tariffs are lifted, Chinese buyers can route these cargoes directly to the domestic market.

For Russia, this means its LNG would no longer be the only obvious replacement for missing Qatari volumes. While Russian LNG might retain freight advantages for certain northern Chinese receiving terminals, the return of US LNG could lessen Moscow's ability to command urgency-based leverage in gas deals with China, according to sources.

This dynamic plays directly into China's overarching energy security strategy of diversification, with Beijing having sought to avoid overdependence on any single supplier.

Russia is already China's largest supplier of pipeline gas and was its third-largest LNG supplier in 2025. If both Power of Siberia 2 and Russian LNG volumes were to expand without similar growth from other suppliers, it would raise concentration risks for Beijing, sources said.

"A pipeline contract with a single supplier takes away the flexibility that comes from diverting LNG cargoes when gas usage is unpredictable. It is also unclear what will be the geopolitical consequences of expanding gas trade with Russia, especially with the EU looking to crack down on new revenue sources for the Kremlin," Yep said.

A potential resumption of US LNG deliveries to China would act as a counterweight, allowing China to balance its portfolio.

"The US just visited China last week, so they might have made some agreements, but nothing's been confirmed," an east China trade source said. "But I don't expect any big changes. If China wants to increase Russian LNG imports, the volumes probably won't be too significant."

Power of Siberia 2

Despite these shifting dynamics, analysts caution that more LNG, whether from Russia or the US, might not impact the planned 50 Bcm/year Power of Siberia 2 pipeline project.

Russia's Gazprom and China's CNPC signed last year a legally binding memorandum of understanding for the pipeline, but there has been no progress on the project since then.

"The deal is only pending a final SPA with detailed commercial terms. This is within reach in Putin's current visit if the two sides can reach consensus," Yep said.

LNG and pipeline gas solve different problems for China's energy planners.

The recent Middle East disruption highlighted the vulnerability of LNG supply chains to maritime chokepoints and geopolitical shocks, while Power of Siberia 2 would provide a land-based baseload supply insulated from freight volatility and shipping risks, analysts said.

But market participants do not expect Putin's visit to yield a finalized, binding commercial contract for Power of Siberia 2.

Instead, the market is watching for high-level political memorandums or joint declarations that signal continued commitment to the project.

"Russia will inevitably want to sell more to China," a trade source said. "However, whether an agreement can be reached largely depends on China's attitude."