China is overtaking Europe as the top market for Russia’s pipeline gas
China is overtaking Europe as the top market for Russia’s pipeline gas
Gazprom exports of natural gas to China in the first nine months of the year are up almost 40 per from last year
China is on track to become the largest market for Russia’s pipeline gas this year, overtaking Europe after the Kremlin’s war against Ukraine capped flows of the fuel to the region.
Russia’s gas giant Gazprom PJSC exported 23.7 billion cubic metres of natural gas to China in the first nine months of the year, or almost 40 per cent above volumes exported the same period a year ago, according to Bloomberg calculations based on the Asian country’s customs data and price estimates from the Russian economy ministry.
That compares with 22.5 billion cubic metres of pipeline gas sent to Gazprom’s remaining clients in Europe from January through September, according to calculations based on flows via Ukraine and the TurkStream link.
Gazprom didn’t immediately respond to a request for comment on the figures.
Gazprom has been gradually increasing gas supplies to China via the Power of Siberia pipeline, which was launched in late 2019 and has design capacity of 38 billion cubic metres a year. Last month, Russia’s gas behemoth agreed with China National Petroleum Corp. on additional shipments in December that will ensure an early increase in daily flows to the maximum contract level, which was previously targeted for early 2025.
The agreement came as gas demand in the Asian economy is on the rise. The Paris-based International Energy Agency expects overall gas consumption in China to increase by eight per cent this year, “led by the industrial sector but also supported by power generation, residential and commercial users, and the transport sector.”
While Gazprom plans to boost its annual supplies to China by a further 10 billion cubic meters via the so-called Far Eastern route from 2027, that’s still a fraction of what the company sent to Europe before Russia invaded Ukraine in 2022.
While most of the European Union sought out alternatives for Russia’s gas, Gazprom remains a critical source of energy for some nations, including Hungary, Austria and Slovakia. Pipeline exports to the region increased by 16 per cent in the first nine months of the year from the same period a year earlier, Bloomberg’s calculations show.
As Gazprom’s five-year transit agreement with Ukraine expires in December 2024 and Kyiv has no intention to extend it, around half of the gas flows going to Europe are under risk of being halted.
European officials are holding talks to replace transit flows, with Azerbaijan potentially becoming a solution, but a deal doesn’t seem to be close with less than three months left to run.
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