Russia's liquefied natural gas (LNG) exports to China surged to record levels in November.
Customs data released last weekend showed that the amount of LNG exported by Russia to China in November reached 1.6 million tons, more than double the same period last year.
This increase helps Russia surpass Australia, becoming China's second largest LNG supplier, behind only Qatar.
To increase competitiveness, Russia is forced to reduce prices. Russian LNG was the cheapest source of supply among the 12 countries exporting LNG to China in November, down about 10% from the average price of $9.85 per million British thermal units (mmBtu).
Meanwhile, Russian gas exports to China via the pipeline are expected to increase by about 25% this year, as Russia boosts sales to Asia and strengthens relations with the world's largest energy consumer.
However, this increase is still not enough to cover the lost revenue due to Russia's loss of the European gas market.
Since the Russia-Ukraine conflict broke out, Russia has shifted the bulk of its crude oil exports to India and China. Meanwhile, shifting gas to the east is more difficult than oil. Prolonged negotiations to increase Russian gas exports to China have achieved limited results.
An unnamed source said that Russian energy giant Gazprom plans to export about 38.6-38.7 billion cubic meters of gas to China this year via the Power of Siberia pipeline, up from 31 billion cubic meters in 2024 and exceeding the designed capacity of 38 billion cubic meters per year of the pipeline.
In October, Gazprom CEO Alexei Miller affirmed that the volume of gas passing through the Power of Siberia route will exceed 38 billion cubic meters this year.
During Russian President Vladimir Putin's visit to China in September, the two countries agreed to increase transportation through the pipeline by 6 billion cubic meters per year to 44 billion cubic meters.
Russia and China have also approved the Power of Siberia 2 pipeline project, which is expected to supply an additional 50 billion cubic meters of gas per year from the Yamal gas fields in the Arctic, passing through Mongolia. However, the biggest obstacle for the project is that gas prices have not yet been resolved.
In addition, China also agreed to increase gas imports via the Sakhalin gas pipeline from Russia's Far East to 12 billion cubic meters per year, compared to the 10 billion cubic meters previously agreed. The Russia-China gas pipeline is expected to be operational from 2027.
The Russian Ministry of Economy estimates that gas exports to China in 2025-2028 will be 30-40% lower than the value of exports to Europe before.
Data from the Russian Finance Ministry shows that gas exports brought about 420 billion rubles (equivalent to 5.28 billion USD) to the Russian state budget in the period from January to November. Total revenue for the whole year is expected to reach about 470 billion rubles (nearly 5.9 billion USD), down 71%, compared to the record of 1,630 billion rubles (about 20.5 billion USD) in 2022, when gas prices in Europe skyrocketed, and lower than 490 billion rubles (about 6.2 billion USD) in 2024.
