Decline in Russian Gas Revenue Following Widespread Discounts to Europe and China

While international statistics indicate a significant increase in Russian gas exports to Europe and China, extensive discounts offered by the Kremlin to customers due to Western sanctions have resulted in a decline in gas export revenues rather than growth. On Tuesday, August 7, the Associated Press reported a 27% increase in Russia's liquefied natural gas (LNG) exports to France without mentioning the price of Russian gas. However, EU statistics show that despite the growth in natural gas imports through pipelines and LNG from Russia, Moscow has received less money compared to last year. Chinese customs data also reflects a similar situation, with an 11% increase in the volume of natural gas and LNG imports from Russia in the first half of this year, but the value has dropped by 20% to around $2 billion. Earlier, the Financial Times reported in April that China had offered such a low price for additional gas from Russia that it was nearly equivalent to the subsidized gas prices for Russian citizens. EU statistics also reveal that despite a 27% increase in Russian gas imports in the first half of this year, the amount paid to Russia for gas imports was only €8.7 billion, which is less than the first half of last year. Before the military invasion of Ukraine, Russia exported over €750 million worth of gas to the EU daily, which has now fallen to about €100 million, largely due to a decrease in import volumes and partly due to lower gas prices. Sanctions from seven industrialized countries along with the EU have forced Russia to sell its oil and gas at prices significantly lower than global rates to prevent global markets from facing oil and gas shortages and to limit Russia's revenues for its war machine against Ukraine. Meanwhile, while China and India are Russia's largest allies, they have received the most discounts on Russian oil imports. Despite a significant surge in Russia's oil, gas, and non-oil product exports to China, the total value of all these products in the first half of this year has grown by less than 4% compared to last year, reaching $65 billion. While the EU was the largest customer for Russian fossil fuels before the military invasion of Ukraine, it is now ranked fourth after China, India, and Turkey.