Russian Gas Exports to Europe Take a Hit in 2025
Be cautious: The pipes are about to shut.
In 2024, the Russians managed to export approximately 51.7 billion cubic meters of gas to Europe despite the punishing sanctions imposed by the EU. However, 2025 is shaping up to be a completely different story, as the cessation of gas supplies through Ukraine and the destructions of the Urengoy - Pomary - Uzhgorod pipeline and the gas metering station Sudzha have wreaked havoc on Russian gas exports.
According to Igor Yushkov, leading analyst at the Fund for National Energy Security, around 18 billion cubic meters of Russian gas passed through Ukraine in 2024, but after Kyiv refused to extend the transit agreement with Gazprom, the company stopped gas supplies via this route from January 1, 2025. The destruction of the gas metering station Sudzha by Ukrainian forces on March 28, 2025 further complicated matters, effectively eliminating the theoretical possibility of resuming pipeline gas supplies to the EU via this pipeline.
In the first quarter of 2025, Russian gas exports to Europe dropped to approximately 10 billion cubic meters, with most of the supplies coming in the form of LNG from the "Yamal LNG" plant. This drop in exports has resulted in lower earnings for Russia, as the average gas price in the European market in 2024 was $387 per thousand cubic meters, amounting to around $20 billion for Russian exports.
The US Treasury Department's sanctions on two mid-tonnage Russian LNG plants - "Cryogas-Vysotsk" and "Portovaya" – have dramatically impacted LNG exports to the EU. As a result, LNG supplies to the EU are essentially coming only from the "Yamal LNG" plant, says Igor Yushkov. This situation is significant, as Total Energies, a French company, controls 20% of "Yamal LNG", and may potentially lobby against a complete ban on Russian gas imports into Europe.
The project capacity of "Yamal LNG" is 17.4 million tons, but the plant actually produces over 20 million tons of LNG, most of which is sold in Europe. The export of LNG from the "Yamal LNG" plant is done by 15 Arctic-class Arc7 gas carriers, which can make voyages eastwards along the Northern Sea Route from November to June, with the route being charted by icebreaker fleets. By 2025, with a relatively short transportation leg, LNG exports from the "Yamal LNG" plant are expected to be close to current levels. However, if gas carriers have to regularly travel to China and Southeast Asia via the Suez Canal, export volumes are likely to decrease.
In the worst-case scenario, NOVATEK companies may have to redirect around 15 million tons of LNG. This would involve exploring new markets such as Vietnam, Thailand, Bangladesh, and Pakistan. Spot deliveries could be redirected within 0.5-1 million tons, while long-term contracts may not be possible for 1-2 years. However, this is only a temporary solution. Russian gas companies will inevitably have to reduce costs by lowering the cost of gas production and transportation due to increasing competition.
According to the National LNG Association, between 2025 and 2030, new LNG production capacities of over 70 million tons per year will be commissioned in the US, 72 million tons per year in the Middle East (including around 48 million tons per year in Qatar), 33 million tons per year in Africa, and slightly over 8 million tons per year in Australia. This flood of cheap gas in the global LNG market could open up opportunities for Gazprom to increase gas exports via the Power of Siberia pipeline, as well as the construction of the so-called "bridge" (in the Krasnoyarsk region) to connect the eastern and western parts of the country's gas transportation system, which would allow gas from Yamal and Gydan fields to be transported to Asian markets.
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- The drop in Russian gas exports to Europe due to the destruction of pipelines and political disputes is causing concern in the finance industry, as the losses for Russia amount to billions of dollars.
- In the face of increased competition from the energy industry, Russian gas companies may have to explore new markets in Asia to offset potential losses from the European Union.
- The US Treasury Department's sanctions on mid-tonnage Russian LNG plants and the growing LNG production capacity in other regions could impact the general-news landscape, as the global LNG market becomes increasingly complex due to political and economic factors.
