Losses in the billions

Gazprom cannot replace European customers

The alternatives to the European business of Russian gas giant Gazprom are apparently unable to make up for the billions lost by the state-owned company. The slump in the gas business with Europe contributed to the energy company ending a financial year with a loss for the first time since 1999.

According to the Reuters news agency, the loss in 2023 amounted to seven billion dollars (around 6.5 billion euros). According to data from the state gas supplier and Reuters calculations, Russia exported around 63.8 billion cubic meters of gas to Europe via various routes in the first year of the war in 2022. In 2023, deliveries fell by more than half to 28.3 billion cubic meters. These figures are a far cry from 2018, when Russia pumped a total of 200.8 billion cubic meters of natural gas to the European Union and other countries such as Turkey. Export capacities were also reduced by the damage to the Nord Stream pipes in the Baltic Sea, where explosions occurred in September 2022 that are still unexplained today.

Russian President Vladimir Putin consults with Gazprom CEO Alexei Miller.(Bild: AFP/POOL/Mikhail KLIMENTYEV)

New pipeline projects with China
Russia has therefore turned its attention to China. By 2030, 100 billion cubic meters of natural gas are to flow to China every year. New pipelines should also contribute to this. However, some of the plans are making slow progress because there is no agreement on price and other issues. 

Even if Gazprom were to implement all pipeline projects, revenues with China would be significantly lower than with Europe: according to the Moscow-based trading office BCS, Gazprom's revenues from gas sales to Europe in the period from 2015 to 2019 amounted to an average of 3.3 billion dollars (around 3.1 billion euros) per month thanks to monthly deliveries of 15.5 billion cubic meters. According to Reuters calculations, revenues from gas deliveries to China for the whole of 2023 are more likely to be USD 6.5 billion (around EUR 6 billion). 

Gas prices for China exports collapse
According to a document seen by Reuters last month, the Russian Ministry of Economy expects the price of gas for exports to China to fall continuously over the next four years. In a worst-case scenario, there is even talk of a slump of 45 percent to 156.7 dollars per 1,000 cubic meters in 2027. No reason for these expectations was given in the document, but there is competition from Turkmenistan, which also supplies gas to China via a pipeline, or from liquefied natural gas supplies.