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In a strategic pivot towards Asia, Gazprom PJSC has reported delivering record volumes of natural gas to China through the Power of Siberia 1 pipeline, exceeding its supply obligations. The Russian energy giant fulfilled an elevated request from China National Petroleum Corporation (CNPC) on Thursday, marking a significant moment as the company seeks to deepen ties with Beijing amid shifting global energy dynamics.
A recent agreement between Gazprom and CNPC, established last month, has laid the groundwork for increased natural gas deliveries in the upcoming year. Gazprom is setting its sights on boosting annual exports to China from a planned baseline of 30 billion cubic meters (bcm) with the potential to increase up to 38 bcm. These developments come as European nations have been actively reducing their reliance on Russian energy in the aftermath of the Ukraine conflict.
Looking ahead, Gazprom is negotiating terms for the Power of Siberia 2 pipeline, which could further expand its export capabilities to China. This proposed pipeline may eventually match or even surpass the volumes historically sold to Western Europe, with discussions indicating an additional capacity of up to 50 bcm annually. The shift towards Asia signifies a major realignment for Gazprom as it adapts to the changing geopolitical landscape and evolving market demands.
InvestingPro Insights
As Gazprom PJSC focuses on expanding its operations in Asia, real-time data from InvestingPro shows a mixed financial picture for the energy behemoth. With a market capitalization of $43.56 billion, Gazprom is trading at a low Price/Book multiple of 0.29 as of the last twelve months ending Q2 2023, highlighting a potential undervaluation of its assets. Despite a significant revenue decline of 31.7% during the same period, the company boasts impressive gross profit margins of 66.89%, indicating strong profitability on the cost of goods sold.
InvestingPro Tips reveal that Gazprom is operating with a significant debt burden and has not been profitable over the last twelve months. However, analysts predict the company will turn a profit this year, which could be a pivotal point for investors considering Gazprom’s stock. Additionally, the company’s low price volatility may appeal to investors looking for stability in the often-turbulent energy sector.
For those seeking deeper insights, InvestingPro offers additional tips on Gazprom, including its status as a prominent player in the Oil, Gas & Consumable Fuels industry and its valuation implications for free cash flow yield. Subscribers to InvestingPro can access a wealth of further analysis, with a total of 10 InvestingPro Tips available for Gazprom at InvestingPro Gazprom. Currently, InvestingPro subscription is on a special Black Friday sale, offering up to a 55% discount, making it an opportune time for investors to gain comprehensive insights into companies like Gazprom.
