Russia Expands Gas Exports to China Amid European Market Losses

Russia's Gazprom agreed to increase gas supplies to China and signed a memorandum for the new Power of Siberia 2 pipeline at reduced prices compared to European buyers. This move follows Russia's efforts to deepen energy ties with China post-sanctions due to the Ukraine conflict.

Russia is deepening its energy ties with China, its largest trading partner, by increasing gas supplies through existing pipelines and signing a memorandum for the construction of the Power of Siberia 2 pipeline. The agreements came at a lower price point than those previously charged to European buyers, Russian state news agencies reported.

Amidst sanctions from the West following the 2022 Ukraine conflict, Russia aims to compensate for the loss of its European market share by expanding its gas exports to China. Russian state-controlled Gazprom has pushed the gas flow to 44 billion cubic meters through the existing Power of Siberia route, while the newly proposed pipeline through Mongolia is set to offer an additional 50 billion cubic meters annually.

The discussions intensified after a meeting between President Vladimir Putin and his Chinese and Mongolian counterparts in Beijing, where they signed over 20 bilateral cooperation documents. While investing in these structural expansions, Gazprom shares showed a minor uptick, solidifying Russia's strategic pivot towards the East in the face of European market retreat.