Gazprom’s shares fell sharply on the Moscow Exchange following the announcement of preliminary agreements on the Power of Siberia Two gas pipeline, SİA reports citing The Moscow Times.
The project, designed to deliver 50 billion cubic meters of gas annually and strengthen ties between Russia and China, has sparked a negative response from investors.
Gazprom’s stock lost 3.12% by the end of Tuesday’s main trading session, dropping to 130.7 rubles, while the company’s market capitalization fell by around 100 billion rubles. The decline was the steepest among all shares on the Moscow Exchange index, dragging the overall index down 1.44% to a monthly low of 2845.39 points.
Despite the announcement, only a memorandum of intent was signed in Beijing, with no binding agreement on gas supplies. Sergey Kaufman, an analyst at Finam, noted that “even if the project is launched, it will pressure the company’s finances, as Gazprom would have to fully fund the construction, stretching nearly 2600 kilometers.” China, meanwhile, has declined to share costs.
Pricing remains the key obstacle. Aleksey Gromov, director of the energy department at the Institute for Energy and Finance, explained that Beijing seeks tariffs close to Russia’s domestic rates, about $120–$130 per thousand cubic meters. Moscow, however, insists on $265–$285.
Energy market expert Mikhail Krutikhin, citing company sources, estimated the future construction costs at roughly two trillion rubles. “Taking into account the massive expenses for gas transportation infrastructure and field development,” he said, “it can be concluded that Russia will, in essence, continue subsidizing Chinese gas consumers at a loss.”
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