Gazprom’s stock price plummeted on news that negotiations with China had been suspended
15 July 18:12
Gazprom shares on the Moscow Exchange on Wednesday, July 15, hit a 17-year low following news that China had de facto suspended negotiations on the “Power of Siberia-2” gas pipeline, which the Kremlin had hoped would replace lost gas markets in Europe. This was reported by "Komersant Ukrainian", citing Russian propaganda media.
During trading, Gazprom shares fell to 90.21 rubles—the lowest level since November 20, 2008—losing nearly 3% at one point. Since the beginning of July, Gazprom’s stock has fallen by 11%; since the start of the year, by 27%; and compared to its pre-war highs in the fall of 2021, it has lost nearly 80% of its market capitalization. The gas giant’s market capitalization now stands at 2.147 trillion rubles, or $28 billion—36 times less than the $1 trillion mark that company chairman Alexey Miller promised to reach two decades ago.
“Gazprom,” which operates the world’s largest proven gas reserves, lost its biggest customers after the Kremlin’s failed attempt to “freeze” Europe in order to secure concessions on Ukraine. Gazprom’s supplies to the European market have fallen to their lowest level since the early 1970s, and plans to redirect gas exported to the EU to the Chinese market are falling apart.
According to The Wall Street Journal, during dictator Vladimir Putin’s most recent visit to Beijing, Chinese officials asked that the issue of the new “Power of Siberia 2” gas pipeline not be raised again until Russia’s terms change. China, according to WSJ sources, is demanding that gas prices be lowered to the level charged within Russia—which is five times lower than Gazprom’s current prices for China, which already include a discount of more than 30%.
China apparently believes that since Russia has no alternative markets, it can dictate its own terms, notes investment banker Yevgeny Kogan. Starting in September 2027, the European embargo on pipeline gas from Russia will take effect, which means that Gazprom will lose its last EU customers—Hungary, Slovakia, and Greece.
“Currently, China has a sufficient ‘window of opportunity’ to engage in dumping, since many Middle Eastern and North African LNG suppliers will be willing to sell gas to China at a discounted price, because they are unable to sell gas to Europe due to the uncertain situation surrounding the Strait of Hormuz,” notes Natalia Milchakova, lead analyst at Freedom Global.
Investments in “Power of Siberia 2” are estimated at $10 billion, she notes. Furthermore, if the pipeline runs through Mongolia, the question will inevitably arise as to what price Mongolia will agree to pay for Russian gas in order to participate in the project. “It is quite possible that this country could demand a discount on the price, similar to the discount offered to China,” adds Milchakova.
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