• 27/05/2024 23:52

Russia will supply gas to China 28% cheaper than to Europe

Russia will supply gas to China 28% cheaper than to European consumers, at least until 2027. This is reported by Bloomberg with a link to the forecast of the Russian Ministry of Economic Development.

Russia will supply gas to China 28% cheaper than to Europe

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The forecast points to financial constraints on Moscow's intensive efforts to develop energy ties with China amid a standoff with the West.

Even before the full-scale invasion, Gazprom said it viewed the Asian country as a promising market, expecting demand to in European markets will decline by the end of this decade.

This year, the ministry forecasts the price of gas exports to China at $257 per 1,000 cubic meters, compared with $320.30 for flows to Western markets, according to the baseline scenario.

From 2025 to 2027, the price for China will be gradually decrease, while the price for deliveries in the western direction is forecast to remain almost unchanged.

Gazprom currently supplies gas to China directly via the Power of Siberia gas pipeline and will gradually increase volumes to the planned annual maximum at 38 billion cubic meters next year.

In 2022, just before the full-scale invasion of Ukraine, the Russian gas producer signed a second agreement to supply 10 billion cubic meters per year to China, with deliveries planned until 2027.

Gas exports are set to grow further as Russia and China are discussing the possible use of the Power of Siberia 2 gas pipeline, which will increase Gazprom's supplies to 98 billion cubic meters per year.

However, even if the plans come true and all three pipelines operate at full capacity, they will transport only about half what Russia sent to Europe before the full-scale war in Ukraine.

Gazprom still exports pipeline gas to several European countries and Turkey, but last year flows to Europe fell to their lowest levels since the early 1970s years and amounted to approximately 45 billion cubic meters, according to estimates by the International Energy Agency.

According to Gazprom, this is a small fraction of the record 201 billion cubic meters transported to the West in 2018.

minfin.com.ua

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