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Gazprom CEO In Iran to Talk Oil, While Putin is in China

The CEO of Russian state-run gas giant Gazprom arrived in Iran on Wednesday with the delegation in what has been described as a “working visit with high-level Iranian officials, including the country’s oil minister, Reuters reports. 

Gazprom CEO Alexei Miller is visiting Iran at the same time that Russian President Vladimir Putin is visiting China for high-level talks.  

Last December, Moscow said it was hastening work on a “major new interstate agreement”, describing the project as at “a high stage of readiness”, according to Reuters. 

With regards to Putin in China, among other things, Moscow and Tehran have also been in ongoing talks for the construction of a pipeline, the Power of Siberia-2, which would be capable of transporting 50 billion cubic meters of gas annually from Russia to China, via Mongolia. 

The high-level talks come at a time when Gazprom, the biggest natural gas company in the world, is suffering from the impact of Western sanctions. For 2023, Gazprom reported a net loss of nearly $7 billion, representing its first loss in more than two decades due to severely reduced gas trades with Europe and the loss of the Nord Stream pipelines. 

While the Power of Siberia link to China is gradually reaching its nameplate capacity, it cannot fully offset the decline in European gas demand.

Gazprom's principal shareholder, the Russian government, faces fiscal strain amidst heightened military expenditures and ongoing Western sanctions.

The decline in gas revenues, underscored by a 40% drop in gas revenue to 4.88 trillion rubles, has led Gazprom to explore revenue diversification strategies. 

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In 2022, Russia was still supplying natural gas to Europe, hitting nearly 64 billion cubic meters of gas that year. However, in 2023, those volumes dwindled to just over 28 billion cubic meters.

By Charles Kennedy for Oilprice.com

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