Europe’s Death Knell: From Nord Stream to Siberia’s Eastward Turn

Russia has now turned its back on Europe. It has signed an agreement with China to build a new pipeline that will carry Siberian gas straight into the Chinese heartland — and, in time, potentially southward into India. The Power of Siberia-2 is more than a project on paper: it is the symbol of a structural break. The westward arteries that once sustained Europe are being rerouted east, redrawing the map of Eurasia’s energy flows.

The destruction of the Nord Stream pipelines — allegedly carried out by the United States in collaboration with Germany — was not just sabotage but the pulling tight of a noose Europe had itself fashioned. The cheap gas that underpinned Germany’s industrial core was severed at a stroke. Deprived of Russian pipeline supplies, Europe turned to sanctions that cut off Russian oil as well. The continent now relies on expensive liquefied natural gas from across the Atlantic, while its factories slow, margins shrink, and competitiveness ebbs away. What was once a foundation of prosperity has become the scene of collapse.

Before the rupture, Germany’s prosperity rested on long-term contracts with Gazprom that delivered vast volumes at prices well below the spot market. That bargain powered the Ruhr’s steel mills, BASF’s chemicals, and the Mittelstand’s machinery lines — the bedrock of Europe’s export economy. Today those contracts are gone. Berlin now buys liquefied gas from the United States and Qatar at far higher prices, and plants that depended on predictable baseload energy have scaled back or moved abroad. The German model — energy from Russia, markets in China, value-added in Europe — is broken.

Sanctions were meant to cripple Moscow. Instead, they ricocheted. Russia surrendered its premium European customer but secured volume in the East. China, already the world’s largest energy consumer, stepped in on terms that favor Beijing. The result is a new exchange: Europe lost its low-cost supplier; Russia lost its high-margin buyer; China gained both supply security and leverage on price.

The architecture of that exchange is now being welded. Power of Siberia-1 already delivers on the order of 38 billion cubic meters a year from Eastern Siberia into China’s northeast. The planned Power of Siberia-2 — fed by West Siberian fields that once faced Europe — is designed for another 50 billion cubic meters, crossing Mongolia into northern China. With the Far Eastern spur, total Russian pipeline capacity to China could approach the high-80s (bcm per year) within the next decade. Pipelines are not rhetoric; they are commitments in steel that bind producers and consumers for a generation.

Pricing tells the rest of the story. Where Germany once received gas under multi-decade contracts at substantial discounts to volatile spot benchmarks, comparable long-term structures are now being extended east. As additional fields are connected and volumes secured, China’s landed cost falls relative to Europe’s LNG-heavy mix. In practical terms, the formula that once underwrote Germany’s competitiveness is migrating to Beijing — feeding a vast industrial ecosystem with cheaper, long-horizon energy.

For Europe, the shift is already visible on the ground. Energy-intensive sectors in Germany and Central Europe report eroding margins and strategic “pause” decisions on new capacity. Substitution to LNG has a price — not merely in euros per megawatt hour, but in the loss of the predictable baseload that pipeline gas supplied. The continent’s decarbonization push continues, but the bridge has narrowed: higher costs today for promises of efficiency tomorrow. The consequences are macro-structural, not cyclical.

Beijing’s leverage is cumulative. Each kilometer of pipe increases its bargaining power; each marginal molecule delivered under long-term terms improves planning and price certainty. In this re-written script, the EU is not protagonist but bystander. It chose to sever, then watched as Moscow sealed the break by turning east. With Power of Siberia-2, what began as crisis has become geometry: the vectors point away from Europe.

Beyond China lies the possibility of India. New Delhi’s appetite for energy is expanding, and since 2022 it has become a major buyer of discounted Russian crude. In Moscow’s long game, southbound extensions are more than idle talk. If even a portion of that ambition materializes, a Eurasian energy triangle — Russia, China, India — would leave Europe on the outside of a system it once anchored.

None of this happens overnight. Power of Siberia-1 took roughly a decade from signature to full stride. Power of Siberia-2 will require years of trenching, finance, and diplomacy — with Mongolia as transit, and commercial terms still the subject of hard bargaining. But the direction is set, and the economics are consolidating. Europe surrendered leverage; Russia surrendered margin; China acquired both fuel and influence.

The conclusion is uncomfortable but inescapable. Europe severed the links that made its industrial order possible and then discovered that the alternative is dearer and less secure. Moscow has turned the page. Beijing — and perhaps New Delhi — will write the next. For the first time since the 1970s, Europe is no longer at the center of Eurasian energy. It has been relegated to the role of an extra.