Heavy losses for "Gazprom"! Russia Can't Make Up Missed Gas Sales to EU

Kremlin-owned energy kingpin " Gazprom, once Russia's most profitable company, could face a long period of poor performance as it struggles to make up for lost gas sales in Europe with its domestic market and Chinese exports, Reuters reports.

The company recently announced an annual net loss of $7 billion, its first since 1999, after a sharp decline in trade with Europe.

The problems of "Gazprom" reflect the profound impact of European sanctions on Russia's gas industry, as well as the limitations of Moscow's growing partnership with China.

The impact of international sanctions on oil exports is easier for Moscow as it is able to divert seaborne oil exports to other buyers.

"Gazprom" relied on Europe as its biggest sales market until 2022, when Russia's conflict with Ukraine prompted the EU to cut gas imports from Gazprom.

According to data from "Gazprom" and Reuters estimates in 2022, Russia delivered a total of about 63.8 billion cubic meters (bcm) of gas to Europe via various routes. The volume decreased even more - by 55.6%, to 28.3 billion cubic meters last year.

This compares to a peak of 200.8 bcm that Gazprom pumped in 2018 to the EU and other countries such as Turkey.

The mysterious explosions in the underwater gas pipelines "Nord Stream" from Russia to Germany in September 2022 also significantly undermined Russian gas trade with Europe.

Russia turned to China, seeking to increase its pipeline gas sales to 100 billion cubic meters per year by 2030. In late 2019, "Gazprom" began supplying pipeline gas to China through the "Power of Siberia".

Russia plans to reach the annual capacity of the "Power of Siberia" from 38 billion cubic meters by the end of this year, and Moscow and Beijing agreed in 2022 to export 10 billion cubic meters from the Pacific island of Sakhalin.

Russia's greatest hope is the pipeline "Power of Siberia 2" through Mongolia, which is planned to export 50 billion cubic meters per year. But it ran into some pitfalls due to the lack of agreement on pricing and other issues.