Beijing has increased its deliveries of Russian gas by 60% since the start of the year. Something to cushion the shock of the gradual gas cut in Europe.
Gazprom begins to suffer from the war in Ukraine. As the Europeans work on a coordinated embargo on Russian gas, which could see the light of day as soon as next week, the Kremlin-owned company has seen its sales fall by 27% in the first four months of the year, in comparison with 2021.
“Exports to countries outside the CIS (the EU and Turkey, editor’s note) amounted to 50.1 billion cubic meters,” the group said in a statement, without providing an explanation.
Over this same period, the gas giant indicated that its production was down 2.5% over one year, to 175.4 billion cubic meters. To reach 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 winter must be organized in the coming months, Gazprom is putting pressure by conditioning these deliveries to the requirements of Asia:
“The reconstitution of gas reserves in underground installations in Europe is a very serious challenge”, assured the group. “The total amount of gas available in the European market is highly dependent on demand in the growing Asian market.”
China, in particular, is the great support of Russia: without supporting or condemning the war led by Vladimir Putin in Ukraine, it offers a way out for Russian companies, struggling with European sanctions.
Beijing has thus raised its gas deliveries by 60% in one year, underlines Gazprom. This, thanks to the Power of Siberia gas pipeline, launched after the annexation of Crimea, and in a similar geopolitical context.
Moscow and the Middle Kingdom reiterated in March, by agreeing on the design of the Soyuz Vostok pipeline which will cross Mongolia towards China, and will be able to transport up to 50 billion cubic meters of gas per year, after signing a bilateral agreement.
Moscow big winner of rising prices
Apart from this strategic reversal, Moscow has succeeded for the moment in overcompensating for the fall in its gas sales: and for good reason, the rise in the price of a barrel and a cubic meter of gas is largely benefiting it.
Natural gas has thus climbed by 85% since the beginning of the year, when oil has increased by 30% between January and April… Consequence: while Russia was selling an average of 12 billion euros of hydrocarbons per months, in the countries of the European Union, this average has risen to 22 billion since the beginning of the conflict.
But the tide could turn quickly for the Kremlin. Berlin has reduced its dependence on gas by a third, and still aims to break away from Russia in 2022. Poland and Bulgaria have also already shown that they will not accept to pay for Russian hydrocarbons in rubles, and have been disconnected, therefore, by Gazprom.