The Russians will provide a 30% discount on Chinese gas
"Gazprom" is at a dead end
The supply of Russian gas to China via the Power of Siberia pipeline, which has been operating since 2019, will continue in the coming years with double-digit discounts. This follows from the forecast of socio-economic development of the Russian Federation prepared by the Ministry of Economic Development. According to the document, the average price of gas for China next year will be $261 per thousand cubic meters, which is 35% lower than current prices in Europe.
Chinese discounts will cost Gazprom $3 billion next year, $3.1 billion in 2026 and $3.6 billion in 2027, according to calculations by The Moscow Times. Over three years, Russia will lose almost $11 billion compared to prices in Gazprom's other markets.
Russian pipeline gas exports, which fell last year to their lowest since 1985, will slowly grow, but will remain half of pre-war levels. For example, Gazprom sold 185 billion cubic meters of gas in 2021. Last year, supplies fell to 69 billion cubic meters.
The failed attempt to "freeze" Europe in order to obtain concessions on Ukraine has cost Russian gas companies dearly. Gazprom currently has about 100 billion cubic meters of excess gas annually. There is nowhere to sell it.
The situation for Gazprom is very grim, says Elena Rybakova, a senior fellow at the Peterson Institute for International Economics in Washington. In May, according to the Financial Times, the company prepared a secret report in which it warned that it saw no prospects for regaining its lost market share in the next decade. The European pipeline gas market is lost for a long time, and sanctions and the lack of its own technology are hampering the sale of liquefied gas. “Gazprom is in a dead end. And the company knows it,” Rybakova notes.
