The alternatives for the European activities of Russian gas giant Gazprom apparently cannot replace the state-owned company’s billions in losses. The collapse of gas trade with Europe has contributed to the energy company ending a financial year at a loss for the first time since 1999.
According to the Reuters news agency, the deficit in 2023 would amount to seven billion dollars (about 6.5 billion euros). According to data from the state gas supplier and Reuters calculations, Russia exported about 63.8 billion cubic meters of gas to Europe through various routes in the first year of the war, 2022. In 2023, deliveries fell by more than half to 28.3 billion cubic meters. These numbers are a far cry from times like 2018, when Russia pumped a total of 200.8 billion cubic meters of natural gas into the European Union and other countries such as Turkey. Export capacity was also reduced by the damage to the Nord Stream pipelines in the Baltic Sea, where unexplained explosions continued to occur in September 2022.
New pipeline projects with China
Russia has therefore turned to China. It is expected that 100 billion cubic meters of natural gas will flow to China annually by 2030. New pipelines should also contribute to this. However, sometimes planning is slow to start because there is no agreement on price and other matters.
Even if Gazprom were to implement all pipeline projects, revenues with China would be significantly lower than those with Europe: according to the Moscow-based trading office BCS, Gazprom’s revenues from gas sales to Europe in the period 2015-2019 amounted to 15.5, thanks to monthly deliveries. billion cubic meters to an average of 3.3 billion dollars (approximately 3.1 billion euros) per month. According to Reuters calculations, revenues from gas supplies to China for the whole of 2023 are closer to $6.5 billion (about €6 billion).
Gas prices for Chinese exports are collapsing
Russia’s Economy Ministry expects gas prices for exports to China to fall steadily over the next four years, according to a document seen by Reuters last month. In the worst case, there is even a drop of 45 percent in 2027 to $156.7 per 1,000 cubic meters. No reason for these expectations is given in the document, but there is competition from Turkmenistan, which also supplies gas via a pipeline to China, or from liquefied natural gas.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
