Hot topics | Coronavirus pandemic

The Price Of Gazprom's Gas For China Fell By 10% In April

The Price Of Gazprom's Gas For China Fell By 10% In April

The price of Russian gas supplies to China via the Power of Siberia highway in April fell to $182.7 per thousand cubic meters, while it remained above $200 during the winter months and March. This follows from data from the General administration for customs of the people's Republic of China and the Federal customs service of Russia.

The first deliveries were made in November at a price of $212.2 per thousand cubic meters. Then the price dropped to just above $200 per thousand cubic meters.

The contract for the supply of gas for the "Power of Siberia" is tied to the price of fuel oil and gas oil with a 9-month lag.

In February, at the Gazprom investor day in New York, Gazprom's Deputy Chairman Elena Burmistrova once again called the price of the Chinese contract a top secret of the concern: "We are often asked about the price of gas, which is stipulated in the contract between Gazprom and KNNK. Unfortunately, we do not disclose the price parameters, because this is stipulated by the terms of the contract, it is a trade secret."

In other words, Alexander Medvedev, Burmistrova's predecessor, advised not to approach this secret. In 2014, a few days after signing the contract, he said: "Now every housewife wants to know the price of gas, but this is inappropriate."

However, it is the price of the Chinese contract that is now one of the few good news for the Russian gas company (against the background of the fact that the average price of Gazprom's export supplies, according to the FCS, fell to $109 in April).

Fitch Ratings recently noted: Gazprom has never explicitly disclosed the price of the Chinese contract, but we believe that it is currently higher than its price in Europe." Fitch analysts believe that after reaching a supply plateau of 38 billion cubic meters per year, the contract will contribute between $3 billion and $4 billion to Gazprom's EBITDA (depending on the oil price environment).