Shares of Russian gas giant Gazprom experienced a sharp decline following the conclusion of President Vladimir Putin’s visit to Beijing, where he was unable to finalize an agreement on the construction of the Power of Siberia-2 pipeline.
During trading on the Moscow Exchange, Gazprom’s stock fell by 3.5%, reaching a price of 119.06 rubles per share, making it the worst performer among major Russian blue-chip companies. In just one day, the gas holding lost approximately 100 billion rubles in market capitalization, with total losses exceeding 120 billion rubles, equivalent to about $1.75 billion, since the start of Putin’s trip to China.
The failure of the negotiations also triggered a downturn across the entire Russian stock market, impacting shares of oil companies and large-diameter pipe manufacturers that had anticipated significant orders for the new project.
Despite the presence of five deputy prime ministers and the signing of various declarations during the talks, none of the 40 documents produced addressed energy cooperation. Notably, there was no mention of the Power of Siberia-2 pipeline.
The primary obstacle in the ongoing negotiations, which have lasted over a decade, remains China’s pricing ultimatum. Beijing is demanding a reduction in gas prices to match domestic Russian levels, specifically to $50 per thousand cubic meters. This figure is five times lower than current payments from China and significantly less than the prices Gazprom charges other foreign clients.
Gazprom's stock has sharply declined following President Putin's unsuccessful negotiations in China regarding the Power of Siberia-2 pipeline. The failure has not only impacted Gazprom but also caused a broader downturn in the Russian stock market.