De Facto Pause in Negotiations with Beijing

Gazprom shares crashed on Wednesday to their lowest level in the last 17 years. Amid reports of a de facto pause in negotiations with China regarding the 'Power of Siberia-2' pipeline, the company's stock on the Moscow Exchange fell to 89.85 rubles per share. This is a historical low since 2008, with the stock losing more than 3% of its value during the day.

The cause of the crash was reports from Western media that Beijing has suspended negotiations regarding the new gas pipeline. The Kremlin viewed this project as a key tool to compensate for the loss of a significant portion of the European sales market.

Chinese Conditions: Domestic Market Price

According to The Wall Street Journal, during Vladimir Putin's last visit to Beijing, Chinese officials issued a strict directive: do not raise the issue of 'Power of Siberia-2' again until Russia changes its terms. During subsequent consultations, the Chinese side made it clear that they would agree to the project only on the condition of gas supplies at a price close to the Russian domestic market.

Previously, Moscow hoped that the new pipeline through Mongolia would allow redirecting part of the supplies previously sent to Europe to China. However, negotiations reached a deadlock due to fundamental disagreements over price and contract terms.

Loss of Capitalization and European Market

The situation in the stock market for the energy giant is critical. Last month, Gazprom shares fell by more than 20%. Since the beginning of July, the decline has been about 11%, and since the beginning of the year, about 27%. Compared to peak values in the autumn of 2021, the company's capitalization has shrunk by almost 80%.

Currently, Gazprom's market capitalization is about 2.15 trillion rubles ($28 billion). This is dozens of times less than the $1 trillion level that the company's head, Alexey Miller, promised to achieve two decades ago.

The company's problems are exacerbated by the loss of key European buyers. Gazprom's exports to Europe have fallen to minimum levels since the early 1970s against the backdrop of reduced supplies due to Russia's war against Ukraine.

Threat of New US Sanctions

New risks from the West are also increasing pressure on the Russian market. US senators have introduced an updated bill, the Sanctioning Russia Act 2026. The document provides for the possibility of imposing blocking sanctions against Sberbank, VTB, Gazprombank, and the Central Bank of the Russian Federation.