China Secures Deep Discount on Russian Natural Gas

Russia is providing China with a substantial discount on natural gas purchases, highlighting the Kremlin's fiscal dependency on Beijing amid ongoing Western sanctions and European efforts to reduce reliance on Russian energy. According to OilPrice, Russian government projections and documentation from the Russian Duma cited by The Moscow Times show that China will pay an average of approximately $248 per thousand cubic meters of pipeline gas in 2026.

In comparison, Gazprom's other foreign customers outside the former Soviet Union are slated to pay an average of $562 per thousand cubic meters. This indicates that Beijing is receiving as much as a 56 percent discount on its purchase price. Analysts note that this steep discount represents the cost of Beijing's ongoing political support for the Kremlin's war effort in Ukraine, providing critical funding for Russia's economy.

Shifting Negotiating Leverage

The deep discount reflects Russia's weakened negotiating position following the break with Europe, which left Gazprom with vast gas reserves in Siberia's Yamal Peninsula without traditional customers. Carnegie's Russia Eurasia Center estimates that China is paying up to $60 per thousand cubic meters more to Turkmenistan than the Russian purchase price. Meanwhile, talks regarding the proposed "Power of Siberia 2" pipeline have reportedly stalled over pricing disputes.

While the growing confrontation between the United States and China could theoretically push Beijing to favor pipeline gas over liquefied natural gas, the lack of alternative buyers for Russia's Siberian reserves has significantly strengthened China's position in bilateral energy negotiations.

Key facts

• China will pay an average of approximately $248 per thousand cubic meters of pipeline gas in 2026.
• Gazprom's other foreign customers outside the former Soviet Union will pay an average of $562 per thousand cubic meters.
• The pricing structure represents a discount of as much as 56 percent for Beijing.
• Talks regarding the "Power of Siberia 2" pipeline have stalled amid pricing disagreements.