The Power of Siberia-2 gas pipeline has the potential to transform Northeast Asian energy security dynamics, provided Moscow and Beijing agree to its specific terms. With a predicted annual transport capacity of around 50 billion cubic metres of gas, the pipeline’s construction will increase the natural gas supply to China and Asia.

Economically, Mongolia expects the Power of Siberia-2 to contribute up to USD 1 billion a year in transit fees to the country’s revenue, create employment, facilitate economic diversification and accelerate its energy transition away from coal. All these developments are necessary conditions for Mongolia’s sustainable growth.

Mongolia is a developing economy with an average per capita income of just over USD 4500, an underemployment rate of more than 12 per cent and an overdependence on resource extraction. Such an economic windfall will have substantial implications for Mongolia’s development.

On energy, Mongolia’s ability to import natural gas through the Power of Siberia-2 pipeline will help it transition more rapidly away from coal. Mongolia uses coal for 85 percent of its energy supply and relies on Soviet-era coal-fired combined heat and power plants to service its main cities.