China has ruled out a Russian proposal to export an additional 35bn cubic meters (bcm) of natural gas eastward through Kazakhstan, delivering another blow to Gazprom as the Russian energy giant struggles with mounting losses and a shrinking global footprint, according to Eurasianet.
On April 15, Chinese Ambassador to Russia Zhang Hanhui publicly dismissed the plan, citing infrastructure constraints.
“The supply of [additional] gas from the Russian Federation through Kazakhstan is not possible, because there is one gas pipeline and it is overloaded,” Zhang said. “If we transport [more] Russian gas along this route, we will have to build a new [pipeline]. It is quite expensive. The Russian side is studying [this option], but it is not realistic. In fact, it is not going to work.”
Zhang instead emphasized that the already-planned Power of Siberia 2 (PS-2) pipeline, which would run through Mongolia, remains the more viable option. However, PS-2 has faced repeated delays due to unresolved financing and political issues, despite its proposed capacity of 50 bcm.
Gazprom, once a cornerstone of Russia’s economic and foreign policy strategy, is facing a crisis following the loss of its dominant position in European gas markets due to the war in Ukraine. The company reported a $7bn loss in 2023, followed by a $10bn loss in 2024 — the first annual losses in its history. Media reports estimate that Gazprom’s losses could balloon to $179bn over the next decade.
Additionally, it was reported that a major restructuring is underway at Gazprom, including potential asset sales and layoffs of up to 40% of its headquarters staff.
“Gazprom's gas business is suffering catastrophic losses, along with it, the Russian budget is running out of money, about 40% of which [Vladimir] Putin spends on war.”
As its finances falter, Gazprom has pulled out of several international projects, including energy development deals in Bolivia, India, Venezuela, Tajikistan, and Uzbekistan. The company recently exited the “Shahpakhty” project in Uzbekistan after its production-sharing agreement expired.
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