During trading, Gazprom shares fell to 90.21 rubles – the lowest level since November 20, 2008, at one point losing almost 3%.
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Down 27% since the beginning of the year
Since early July, Gazprom shares have dropped 11%, 27% since the beginning of the year, and compared to the records reached in autumn 2021 before the war, they have lost almost 80% of their capitalization.
Currently, the gas giant’s capitalization stands at 2.147 trillion rubles, or 28 billion US dollars – 36 times less than the 1 trillion US dollars capitalization promised two decades ago by the company’s CEO Alexey Miller, reports The Moscow Times.
Gazprom, which controls the world’s largest confirmed gas reserves, lost its biggest clients after the Kremlin’s failed attempt to “freeze” Europe to negotiate discounts over Ukraine. Gazprom’s supply to the European market has dropped to the lowest level since the early 1970s, and plans to redirect gas exports to the EU to the Chinese market are collapsing.
China told not to talk about it anymore
According to The Wall Street Journal (WSJ), during Vladimir Putin’s last visit to Beijing, Chinese officials asked not to raise the issue of the new “Power of Siberia-2” gas pipeline until Russia’s conditions change. China, according to WSJ sources, demands a reduction in gas prices to the Russian domestic level, which is 5 times lower than the current Gazprom prices for China, which already include more than a 30% discount.
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In China, it seems to be believed that if Russia has no alternative sales markets, it is possible to dictate terms, notes investment banker Evgeny Kogan.
From September 2027, the European embargo on pipeline gas from Russia will come into effect, meaning Gazprom will lose its last clients in the EU – Hungary, Slovakia, and Greece.
“Currently, China has enough ‘window of opportunity’ for dumping, as many Middle Eastern and North African LNG suppliers will be ready to sell gas to China at a reduced price, since due to the uncertain situation around the Strait of Hormuz, they have no opportunities to sell gas to Europe,” notes Freedom Global’s chief analyst Natalia Milchakova.
Investments in “Power of Siberia-2” are estimated at 10 billion US dollars, she reminds.
“Moreover, if the pipeline goes through Mongolia, the question will inevitably arise about the price at which Mongolia will agree to buy Russian gas to participate in the project. It is quite likely that this country may demand a discount similar to that granted to China,” adds N. Milchakova.
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