Whilst russian Gas Is Becoming Cheaper for China, Taxes and Utility Tariffs Are Rising for russians

The ministry of economic development of the rf has revised downwards its forecast for gas production and exports for 2026–2029. moscow has acknowledged that it will not be possible to quickly replace the lost European market. The kremlin will force russians themselves to foot the bill for the consequences of the war – through higher taxes and utility tariffs.

In 2025, pipeline exports to Europe fell by 44% – to 18 billion cubic meters. The forecast for LNG exports in 2026 has been reduced from 40.3 million to 35 million tons. Even according to official estimates, a return to previous supply levels is not expected.

China will not replace Europe on the previous commercial terms. The forecast for the price of russian gas to China for 2026 has been lowered to $247.9 per 1,000 cubic meters. Beijing will secure cheaper gas and a stronger negotiating position, whilst moscow loses the ability to choose its buyers and dictate prices.

The “sila baikala” project, with a capacity of up to 50 billion cubic meters per year, remains without final agreement on price and supply terms. Even after an agreement is reached, construction will take years. The new pipeline will not restore russia’s lost European market, but will tie it to a single major buyer.

The kremlin will plug the holes in the budget at the expense of the population. The ministry of finance of the rf is proposing to raise taxes on dividends, bank deposits and the sale of property to 22%. From 1 July 2027, utility tariffs are set to rise by an average of 11%, instead of the previously planned 8.7%.

russia’s authorities are already factoring a decline in gas revenues into their budget projections. Lost export revenues are not being recouped, dependence on China is growing, while the kremlin is passing on the financial cost of the war against Ukraine to its citizens.