"Beijing dictates its own terms": does Russia have alternatives to the EU energy market

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Gazeta.ru on the pros and cons of the Chinese gas route.

In the next 10-15 years, the European energy market will remain the main export platform for Russia, but the commissioning of the Power of Siberia-2 gas pipeline will allow shifting the focus of energy supplies towards China. At the same time, even a full pumping of the pipeline will not allow a sharp increase in gas transit to Beijing.

Russia's European priority

According to Alexei Gromov, the common position of the European Commission on the continuation of the energy transition does not reflect the point of view of all countries of the Union. The fact is that many states of Central and Western Europe, including Hungary, reinsured themselves in advance by signing a long-term 15-year contract with Gazprom.

“Serbia has followed the same path, which also intends to conclude a new long-term contract with Gazprom. The countries now have to discuss only the price issue. It is obvious that the trend towards energy security for the sake of an accelerated energy transition is now becoming more pronounced. In the next 10-15 years, Russian gas will remain an important component of the EU's balance sheet. The behavior of individual countries like Moldova should be considered a political hysteria that gets out of the way,” the expert concluded.

According to Aleksey Gromov, the whole point is in the special linking of the cost to the domestic resource market of China. The rest of the contracts of the Russian gas giant are focused more on international resource markets, which makes the cost of gas more expensive.

Beijing’s accent on LNG

According to Aleчey Gromov, if during the implementation of the Power of Siberia-2 project, Gazprom succeeds in pushing through the change in the internal Chinese oil binding to international oil exchanges, this will automatically raise the average cost of each thousand cubic meters of gas to $ 300.

“The current tie is a painful issue for Gazprom. I doubt that in the future the monopolist will be interested in maintaining unfavorable conditions for itself. Moreover, in the foreseeable future, China will be ready to accommodate Russia. The fact is that now Beijing buys ultra-expensive LNG from the Asian market. In this regard, a small increase in the cost of Russian gas will still benefit against the background of high prices for liquefied fuel,” Gromov emphasized.