Putin Cuts Gas Price For China On Eve Of Visit To Xi Jinping

To a six-year low.

The Russian government is budgeting for a further reduction in gas prices for China, Reuters reported, citing the Economic Development Ministry's macro forecast through 2029.

According to the forecast, which was published on May 12, a week before Vladimir Putin's visit to Beijing, next year supplies to China via the Power of Siberia pipeline will be delivered at $223.9 per thousand cubic meters - the lowest price since 2021 (China bought gas at $145 then).

Compared to the current year, the price will decrease by 14%, or $34.9%, and will be 34% lower than the price paid by other Gazprom customers in the far abroad ($336.3).

In 2028, the price for China will increase significantly, to $229.7 per thousand cubic meters, and in 2029 - to $235.6. The discount relative to other Gazprom customers will be 30% and 28% respectively.

Compared to the previous macro-forecast of the Ministry of Economic Development, the price of gas for China for the 3-year period has decreased by about 7%, notes Reuters.

The forecast for the volume of gas exports has also been worsened: this year, supplies to non-CIS countries will decrease from 78.2 billion cubic meters to 75 billion. This is more than twice lower than pre-war levels and only slightly better than the result of 2024, which was the worst for Gazprom since 1985.

In 2027, the Ministry of Economy expects gas exports to increase to 82.5 billion cubic meters, followed by 82 billion cubic meters of exports in 2028-29. These estimates have been lowered compared to the previous forecast, which envisaged export growth to 87 billion cubic meters annually by the end of the decade.

Gas supplies to China, according to the MED forecast, should increase by 47% to 56 billion cubic meters by 2029. Additional gas flows should be provided by the Far Eastern route (12 billion cubic meters per year) and the increase in the capacity of the Power of Siberia (6 billion cubic meters).

The Power of Siberia-2 pipeline, which the Kremlin has been offering Beijing for more than 10 years, will not work by the end of the decade, according to the MED forecast. According to the Financial Times, Putin and Xi Jinping are still unable to agree on the price. China demands its reduction to a level close to the domestic Russian level - about $50 per thousand cubic meters. This is 5 times less than China is paying this year and 7 times lower than the prices in the contracts of Gazprom's other foreign clients.

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