![]() ![]() How sustainable margins are is an open question, as it depends on how long oil remains at current levels. And that doesn’t include the cost of refining gas at the Amur processing plant, which would drive the marginal cost of Power of Siberia supplies even higher, he added. ![]() The marginal cost of Gazprom’s supplies to Europe can be estimated at around $120/Mcm, including the 30% export duty, while that of Power of Siberia might be $170/Mcm due to costlier upstream in East Siberia, a Russian gas analyst told Energy Intelligence. This is good news for Gazprom, which is desperately seeking new profit centers after the loss of most of the European market. It is also higher than Gazprom’s average export price in Europe in 2015-20 and potentially generating similar margins. Regardless, the price looks healthy compared with previous years of the Power of Siberia's operations, which started in December 2019. This should recede given this year’s sharp decrease in prices to around $70/bbl. The 38 Bcm/yr contract is priced off oil, allegedly with a 10% slope and nine-month lag - i.e., meaning the current price reflects last year’s oil price spike to above $100/bbl. back in 2014 when oil prices were above $100/bbl. The price is indicative of what Gazprom probably counted on when signing the oil-linked Power of Siberia gas supply deal with China National Petroleum Corp. ![]() The customs agency doesn’t disclose volumes imported by pipeline, but assuming Power of Siberia exports slightly exceeded contracted volumes - agreed at 22 billion cubic meters for full year 2023 - the average price might have been close to $300 per thousand cubic meters in the first half of this year, up from around $210/Mcm a year ago, Energy Intelligence calculates. The Russian state-run pipeline gas exporter generated some $3.4 billion from supplies via the Power of Siberia pipeline to China in the first half of 2023, according to data from China’s General Administration of Customs released last week. The price of Gazprom’s gas sales to China increased by more than 40% on the year in the first half of 2023, a reflection of the tremendous spike in oil prices in mid-2022, Energy Intelligence has estimated based on the Chinese customs data. ![]()
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