Russia Boosts Gas Exports to China, but Loss of Europe Still Hurts Revenues

Post by : Saif Nasser

Russia is set to increase its pipeline gas exports to China by around 25% this year, showing how Moscow is strengthening its energy ties with Asia as relations with Europe remain strained. According to a source familiar with the data, Russian gas deliveries to China through pipelines are expected to reach nearly 39 billion cubic metres in 2025, up sharply from last year.

Most of this gas flows through the Power of Siberia pipeline, which links Russian gas fields to China. The increase means that supplies are likely to exceed the pipeline’s original annual capacity of 38 billion cubic metres. Russian energy giant Gazprom has already signaled that exports through this route will be higher than planned, reflecting strong demand from China.

This growth highlights Russia’s effort to redirect its energy exports eastward after losing much of its European gas market following the war in Ukraine. Before 2022, Europe was Russia’s biggest buyer of natural gas and a major source of income for the state. Since then, political tensions and sanctions have sharply reduced gas flows to European countries.

While Russia has successfully redirected most of its oil exports to countries like China and India, gas has been harder to reroute. Pipelines take years to build, and new projects require complex negotiations, especially over pricing. As a result, even a strong rise in exports to China cannot fully replace what was lost in Europe.

During President Vladimir Putin’s visit to China earlier this year, the two countries agreed to further increase gas supplies through the Power of Siberia route by an additional 6 billion cubic metres per year, taking total future volumes to about 44 billion cubic metres. They also gave approval to the proposed Power of Siberia 2 pipeline, which could one day carry up to 50 billion cubic metres of gas annually from Russia’s Arctic region to China through Mongolia.

However, progress on this second pipeline remains slow. The biggest challenge is the price of gas, which both sides have yet to agree on. Until this issue is resolved, the project is unlikely to move forward.

China has also agreed to buy more gas from Russia’s Far East through a pipeline from Sakhalin Island. Supplies on this route are expected to rise to 12 billion cubic metres per year, with operations starting around 2027.

Despite these developments, Russia’s gas revenues are still under pressure. The Russian economy ministry estimates that income from gas exports to China between 2025 and 2028 will be 30% to 40% lower than what Russia once earned from Europe. At present, the only remaining pipeline route sending Russian gas to Europe is TurkStream, which runs under the Black Sea. Gas deliveries through Ukraine stopped earlier this year after a transit agreement expired.

Financial data shows the scale of the decline. Gas exports are expected to bring in about 470 billion roubles this year, far below the record 1.63 trillion roubles earned in 2022 when European gas prices surged. Even compared to last year, revenues are slightly lower.

In simple terms, Russia’s growing gas sales to China show a clear shift toward Asia and a deepening partnership with Beijing. But the numbers also make one thing clear: China, for now, cannot fully replace Europe as a gas market. Until new pipelines are built and pricing issues are settled, Russia’s gas sector will continue to face serious financial limits despite higher volumes flowing east.