Beijing has increased Russian gas supplies by 60% since the beginning of the year. Something to alleviate the shock of the phasing out of gas in Europe.
Gazprom begins to suffer from the war in Ukraine. As Europeans work on a coordinated embargo on Russian gas, which could come to light next week, the Kremlin-based company has seen its sales fall 27% in the first four months of the year, to comparison with 2021.
“Exports to countries outside the CIS (EU and Turkey, author’s note) amounted to 50.1 billion cubic meters,” the group said in a statement, without elaborating.
During the same period, the gas giant reported that its production fell by 2.5% year-on-year to 175.4 billion cubic meters. “To achieve the 90% filling target for storage facilities set by the European Union, companies will have to pump an additional 56 billion cubic meters of gas,” Gazprom said.
Beijing, a very special customer
If the filling of European tanks in view of the winter has to be organized in the coming months, Gazprom is putting pressure by regulating these deliveries to the requirements of Asia:
“Restoring natural gas reserves in underground facilities in Europe is a very serious challenge,” the team said. “The total amount of gas available on the European market is highly dependent on demand in the developing Asian market.”
China, in particular, is a big supporter of Russia: without supporting or condemning Vladimir Putin’s war in Ukraine, it offers a way out for Russian companies struggling with European sanctions.
Thus, Beijing increased gas supplies by 60% in one year, according to Gazprom. This, thanks to the Power of Siberia gas pipeline, which started after the annexation of Crimea, and in a similar geopolitical context.
Moscow and the Middle East resumed in March, agreeing on the design of the Soyuz Vostok pipeline, which will cross Mongolia into China and carry up to 50 billion cubic meters of gas a year, following the signing of a bilateral agreement.
Moscow is a big winner of rising prices
In addition to this strategic reversal, Moscow has so far managed to offset the decline in its gas sales: and for good reason, the rise in the price of a barrel and a cubic meter of gas greatly benefits it.
Gas has risen by 85% since the beginning of the year, when oil rose by 30% between January and April … Consequence: while Russia sold an average of € 12 billion a month in hydrocarbons to its European countries Union, this average has risen to 22 billion since the beginning of the conflict.
But the tide could change quickly for the Kremlin. Berlin has reduced its dependence on gas by a third and is still aiming to move away from Russia in 2022. Poland and Bulgaria have also already indicated that they will not accept to pay for Russian hydrocarbons in rubles and, as therefore, have been disconnected from Gazprom.