Instead of EU, Russian gas will flow to China

Opening the morning trading session on March 26, 2024, today's gas price in the world market increased slightly by 0.06% to 1.8 USD/mmBTU for natural gas contracts for delivery in May 2024.

Russia's Gazprom is starting construction on a multibillion-dollar gas pipeline, expanding supplies to meet export commitments to China.

Gazprom said the new pipeline will link two existing networks – the Power of Siberia 1 pipeline in Eastern Siberia and the Sakhalin-Khabarovsk-Vladivostok pipeline in Russia’s Far East. The new 828-km pipeline will run from Khabarovsk to the town of Belogorsk in the Amur region, where it will connect to the Power of Siberia 1 pipeline.

The European Union includes LNG in its carbon border tax. Doan Manh Duong/VNA

Oil and gas expert Mikhail Krutikhin said the new gas pipeline will be able to operate in both directions, allowing Gazprom flexibility in choosing the source of gas it will export to China.

Under two contracts signed by Gazprom with China National Petroleum Corporation, Russia will supply 38 billion cubic meters of gas per year from just two fields - Chayanda and Kovykta - via the Power of Siberia 1 pipeline from 2025 onwards. At the same time, it will supply 10 billion cubic meters per year via a branch of the Sakhalin - Khabarovsk - Vladivostok pipeline to China.

In another development, the global LNG market is forecast to face major changes in prices and trade flows by the end of this decade if the European Union includes LNG in its carbon border tax.

LNG is not currently subject to a carbon border tax, so imports are not currently subject to additional tariffs. However, the EU has extended its Emissions Trading Scheme (ETS) to shipping, meaning that LNG cargoes entering Europe will be subject to a carbon tax from 2024.

“The first draft currently only covers new LNG import contracts, but does not rule out a methane tax on all LNG imports above a defined limit,” Wood Mackenzie analysts wrote in a report. WoodMac noted that the EU could go further and include LNG in the CBAM, setting import taxes based on the current carbon price in the ETS.

In the domestic market, the retail gas price in March 2024 continued to be adjusted upward from March 1. Thus, the domestic retail gas price has increased for the third consecutive month since the beginning of the year.

Specifically, the retail price of Petrolimex gas cylinders (including VAT) in the Hanoi market is 460,740 VND/12kg household cylinder; 1,842,760 VND/48kg industrial cylinder, respectively increasing 2,640 VND/12kg cylinder and 10,560 VND/48kg cylinder (including VAT) compared to the previous month. In the Southern region, some agents in Tan Binh district also said that Perolimex Saigon gas company, Total gas company... also increased the price by 2,000 VND/12kg cylinder.

Ho Chi Minh City Energy Import-Export Joint Stock Company informed that gas prices of City Petro, Vina Pacific Petro, Vimexco will increase by VND2,000/12kg cylinder and VND8,000/50kg cylinder. Accordingly, the retail price to consumers will not exceed VND481,000/12kg cylinder and VND2,002,500/50kg cylinder.

Similarly, Saigon Petro Company Limited increased by VND2,000/12kg cylinder, the maximum retail price to consumers is not more than VND443,000/12kg cylinder.

At the same time, Southern Gas Trading Joint Stock Company (Gas South) announced an increase in retail gas prices in March 2024, applicable to the following gas brands: Gas Dau Khi, VT-Gas, A Gas, Dak Gas, JP Gas, Dang Phuoc Gas. The specific increase is 167 VND/kg compared to the previous month, equivalent to an increase of 2,000 VND/12kg cylinder and 7,500 VND/45kg cylinder. With this increase, the retail gas price of Gas South to consumers is 471,900 VND/12kg cylinder and 1,770,831 VND/45kg cylinder (including VAT).

According to gas trading companies, the increase in the USD/VND exchange rate has caused the price of imported gas to Vietnam to increase. In the first 3 months of 2024, gas prices have continuously increased, with a total increase of 13,000 VND/12kg cylinder.

Currently, domestic gas supply only meets about 60% of consumer demand, so domestic gas prices are still affected by the international market.

Information for reference only!

Source: https://congthuong.vn/gia-gas-hom-nay-ngay-2632024-thay-vi-eu-khi-dot-cua-nga-se-chay-sang-trung-quoc-310763.html