What will happen to gas prices by the end of 2023

The Tinkoff-Journal published an article by Marcel Salikhov, president of the Institute for Energy and Finance, entitled "What will happen to gas prices by the end of 2023".

What is the forecast of gas prices

By the end of the year, gas prices will rise to some more fundamentally sound level, in the range of $ 500 - $ 600 per thousand cubic meters. But, of course, not to the level of the last fall, when prices reached $ 2,000 per thousand cubic meters. Nevertheless, this is a higher price level compared to what it was before the reduction of Russian supplies.

Whom now is Russia selling gas to

Let me remind you the main numbers: until 2022, Russia produced more than 700 billion cubic meters of natural gas and exported more than 200 billion cubic meters, the main share of exports — about 150 billion cubic meters — accounted for Europe, the rest — for China, Turkey and the CIS.

Last year, according to our estimates, exports to the European Union fell more than twice — to 58 billion cubic meters — and this year it will decrease even more. And in total, in 2022, Russia produced more than 670 billion cubic meters of gas.

This year, exports to the European Union will continue to fall, and it is unlikely that it will be possible to compensate for this drop with something. Last year, shipments to China increased, but fell to Turkey. This summer, a new gas contract was signed with Uzbekistan for the supply of 3 billion cubic meters annually.

It is clear that these are not European volumes, but nevertheless Russia can supply 5-10 billion cubic meters to Kazakhstan and Uzbekistan.

The main problem is the price. In Uzbekistan and Kazakhstan, domestic gas prices are low, about $ 60 per thousand cubic meters. But Russia will not supply by $60. The price of Russian gas for Belarus is $128, and Russia is unlikely to sell its gas cheaper. But the problem is solved if these countries export gas to China.

The main channel for redirecting Russian exports from Europe is still the Power of Siberia 2. Its design capacity is 55 billion cubic meters per year, and this would allow the volume of gas that was oriented to Europe to be supplied to China. But China now has no urgent need to negotiate, they have an alternative opportunity to build an additional gas pipeline with Turkmenistan.