Gazprom’s Shifting Global Markets and Strategic Diversification into Asia

Gazprom’s strategic pivot from Europe to Asia represents a pivotal shift in the global energy landscape, driven by geopolitical pressures and market realignments. By 2025, European gas exports had plummeted to a 50-year low, with Q2 2025 deliveries hitting 9.93 billion cubic meters—a 50% decline year-over-year—due to the end of Ukraine transit, EU sanctions, and the REPowerEU Plan [3]. This collapse has forced Gazprom to refocus on Asian markets, particularly China, where the Power of Siberia 1 (PoS-1) pipeline has become a lifeline. Deliveries via PoS-1 surged to 38 bcm/year in 2025, a 36% increase from 2024 [4], underscoring China’s growing role as a counterbalance to Europe’s diminishing demand.

However, Gazprom’s long-term financial resilience hinges on resolving the stalled Power of Siberia 2 (PoS-2) pipeline, a 50 bcm/year project critical to offsetting European losses. The project remains mired in a $9.85 billion annual pricing dispute: Russia demands $257 per 1,000 cubic meters, while China insists on a price closer to its domestic level of $60 [2]. Compounding this, Mongolia’s exclusion of the pipeline’s Soyuz Vostok segment from its 2024–2028 national development plan has raised doubts about the project’s feasibility [1]. Despite these hurdles, a September 2025 agreement between Gazprom and China’s CNPC—signed during President Putin’s visit—signals renewed diplomatic efforts to bridge the gap [5]. Yet, without a resolution on pricing, PoS-2’s potential to transform Gazprom’s export capacity remains uncertain.

For investors, the geopolitical and financial implications are stark. While Gazprom’s Q2 2025 net income of 322.78 billion rubles demonstrates short-term resilience through China and domestic sales [2], the company’s reliance on a single market exposes it to risks. China’s demand for gas is expected to grow, but its pricing leverage—bolstered by abundant LNG imports and domestic production—limits Gazprom’s margins. Meanwhile, the EU’s pivot to U.S. and Qatari LNG has further eroded Russia’s influence, with the U.S. now supplying 50.7% of EU LNG imports in Q1 2025 [1]. This shift not only weakens Gazprom’s pricing power but also entrenches Western energy dominance in Europe.

The geopolitical stakes are equally high. Mongolia’s ambivalence over PoS-2 reflects broader regional tensions, as the country seeks to avoid becoming a pawn in Sino-Russian relations. Similarly, the EU’s 2027 goal to phase out Russian gas [4] ensures that Gazprom’s European market will remain a shrinking fraction of its total exports. For investors, this means evaluating Gazprom’s value proposition through a dual lens: the potential for Asian growth versus the structural risks of overreliance on a single client and the geopolitical volatility of infrastructure projects.

In conclusion, Gazprom’s strategic rebalancing toward Asia offers both opportunities and challenges. While China’s energy demand provides a critical buffer, unresolved pricing disputes, Mongolian hesitancy, and the EU’s energy independence agenda create a volatile environment. Investors must weigh these factors against Gazprom’s financial performance and the broader trend of global energy diversification. The coming months will test whether Gazprom can transform its Asian pivot into a sustainable model—or if it will remain a cautionary tale of geopolitical fragility in the energy sector.

Source:
[1] EU imports of energy products - latest developments, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=EU_imports_of_energy_products_-_latest_developments
[2] Russia's Gazprom and China's CNPC to sign 'important agreement' on September 2, https://www.ainvest.com/news/russia-gazprom-china-cnpc-sign-important-agreement-september-2-tass-2508/
[3] Gazprom's exports to Europe plummet to 50-year low, https://finance.yahoo.com/news/gazproms-exports-europe-plummet-50-163959293.html
[4] Farewell to Europe: Gazprom after 2024, https://www.osw.waw.pl/en/publikacje/osw-commentary/2025-02-11/farewell-to-europe-gazprom-after-2024
[5] Gazprom to sign "important" agreement with CNPC during Putin's China visit, https://www.investing.com/news/stock-market-news/gazprom-to-sign-important-agreement-with-cnpc-during-putins-china-visit-93CH-4216870