Russia slashes gas prices for Iran after losing European market
Russia is willing to supply natural gas to Iran at a 75% discount compared to European and Turkish prices.
Facing a significant loss of its European gas market, Russia is desperately seeking buyers in alternative markets and is compelled to agree to what some see as humiliating terms for selling its gas. This situation affects even the so-called "friendly" routes for the Kremlin.
An illustrative example is the reported readiness of Russia to supply gas to Iran at a 75% discount compared to the prices in European and Turkish markets. According to the Russian newspaper Kommersant, the countries are discussing a potential contract under which Gazprom would supply the Iranian market with 300 million cubic meters of gas per day, amounting to 10-12 billion cubic meters annually.
This translates to approximately $100 per thousand cubic meters, positioning it as the lowest price among all of Gazprom’s foreign customers. Russian gas on the European and Turkish markets is sold at about $400 per thousand cubic meters.
In China, Russian gas is supplied at a rate of $260 per thousand cubic meters. Thus, the discussed price between Moscow and Tehran matches what Gazprom’s CIS (Commonwealth of Independent States) clients pay. Iranian Energy Minister Javad Owji asserts that the volume of these supplies would make Iran the largest purchaser of Russian gas.
The terms of the discussed contract involve the supply of 110 billion cubic meters annually, which practically represents the whole surplus gas of Gazprom, following the loss of its European clients. With no alternatives to dispose of this surplus, Russia is compelled to significantly lower prices to attract buyers.
In June, it was reported that Turkey started reducing its gas imports from Russia while simultaneously increasing supplies from other countries.
Earlier analysts noted that, as of now, Gazprom, cut off from Western markets, is in the worst condition in its history