Europe and Turkey will give Gazprom windfall profits

The jump in gas prices due to the Iranian war and the shortage of LNG on the world market will bring Gazprom and Novatek maximum revenues on the European and Turkish markets. They will not cover all losses for pipeline gas due to reduced supplies to the EU, but will be the maximum from 2022.

In the conservative version, the government expects that the average export price of gas for non-CIS countries will be $ 402.9 per thousand cubic meters in 2026. Compared to last year, the cost will increase by 24%. Such data are provided in the materials to the draft law on the federal budget for 2027 and for the planning period of 2028 and 2029, which was submitted to the State Duma for consideration.

The Iranian war was a shock to the market, as LNG exports from Qatar and the UAE. This is clearly seen in the price of Russian gas for Europe and Turkey. It is tied to stock quotes in the EU countries — at the Dutch TTF hub.

So, it is predicted that the cost of supplies to non—CIS countries, excluding China, is mainly to countries EU and Turkey — will grow by 38% at once, to $ 562. At the same time, from August until the end of the year, prices will remain at $ 701.9.

The revenues of Gazprom and Novatek in the premium markets will be significantly higher than in China, which is gradually becoming the main importer of Russian gas. During the year, the cost of deliveries there is expected to grow by 3% - $ 247.9. And the maximum price was in July — $ 270.

The difference in the cost of Russian gas for Europe and China is explained by the fact that in China's supplies are tied to the cost of oil. The same binding existed earlier for European and Turkish companies. However, they themselves insisted on translating the price formula depending on stock quotes. At that time, no one could have imagined what kind of crises there would be and how this would affect stock prices, which in the mid-2010s fell below the cost of long-term contracts.

The jump in revenues on the European and Turkish markets partially compensates for the decline in Gazprom's exports. Due to sanctions and counter-sanctions, its supplies to Europe decreased by about 7-8 times, while, for example, on German stock exchanges the average cost of gas in the five-year period before the energy crisis of 2022 was $ 180.

In this situation, supplies to China are growing, the Power of Siberia gas pipeline has been brought to full capacity and exports to The PRC is roughly equivalent to supplies to Turkey and Europe.

Within the next year The EU plans to completely abandon Russian gas, and the Russian government expects a reduction in export prices to Turkey and Europe to $ 400. They also expect a slight reduction in the cost of gas for China — up to 239.2 billion cubic meters.

The fall in prices in Europe and Turkey is predicted, obviously, with an eye to the fact that the Strait of Hormuz will still be opened, and new LNG plants will continue to be launched in the USA.