Baikal Gas Pipeline Route Selection Prioritizes Economic Efficiency
Russia’s Energy Minister confirmed the rebranding of the Power of Siberia 2 project to Power of Baikal, finalizing a route through Mongolia with a 50 bcm annual capacity to serve northern Chinese markets.
Russian Energy Minister Sergei Tsivilev announced at the Eastern Economic Forum on September 2 that the planned Power of Siberia 2 pipeline has been officially renamed Power of Baikal. The project, approved by President Vladimir Putin, will extend from the Yamal Peninsula and western Siberia, traversing Mongolia to reach China. With a designed capacity of 50 billion cubic meters annually, this new corridor exceeds the 38 bcm capacity of the existing eastern Sino-Russian route, establishing a significant expansion in natural gas supply infrastructure.
The routing decision prioritizes geographic alignment with demand centers over the shorter western alternative. While the former Altai Pipeline proposal would have delivered gas directly to Xinjiang, that region already functions as the primary entry point for Central Asian imports from Turkmenistan, Kazakhstan, and Uzbekistan. Adding Russian supply to this western bottleneck would increase transmission costs and congestion, whereas the Mongolian route places supply closer to the high-consumption hubs of northern China.
Mongolian Route Optimizes Infrastructure Costs
The economic rationale for selecting the central route centers on minimizing the distance between the entry point and end-user markets in the Beijing-Tianjin-Hebei region and Shandong province. By entering China via Inner Mongolia, the gas can integrate directly with the Shaanxi-Beijing pipeline network and the national trunk grid. This configuration reduces the long-term eastward transmission expenses associated with the western route, optimizing the infrastructure investment for a project with a multi-decade lifespan and high capital requirements.
Engineering feasibility further supports the Mongolian trajectory. The alternative western route through the Altai Mountains faces significant logistical hurdles, including complex geological structures, treacherous mountainous terrain, and protected environmental zones such as the Golden Mountains of Altai World Heritage site. In contrast, the Mongolian landscape consists primarily of open steppes and deserts with sparse population density. This terrain provides a favorable environment for constructing large-diameter, high-pressure pipelines, reducing construction complexity and associated risks.
Transit Risks Remain Manageable
Although the route introduces a third-country transit dependency, the geopolitical risk is mitigated by economic interdependence. Mongolia’s ability to restrict gas transit would carry substantial costs for its own economy, given the deep integration of Sino-Russian-Mongolian trade and energy markets. The strategic value of the pipeline to all parties ensures that the commercial benefits of the 50 bcm capacity outweigh the potential for political leverage, maintaining the project’s stability.
The rebranding to Power of Baikal reflects a finalized strategic decision that balances capacity expansion with operational efficiency. By avoiding the engineering challenges of the Altai region and aligning supply with demand distribution, the project secures a robust energy artery for northern China. The decision underscores a focus on long-term commercial returns and infrastructure optimization rather than short-term geopolitical maneuvering.
