Just last week, Russia reported that its natural gas production plummeted last year. The state-owned company Gazprom reports that exports are also suffering massively from Western sanctions. Hopes are now pinned on China.
Russian gas exports to countries outside the Commonwealth of Independent States (CIS) fell by 45.5 percent last year. Exports to third countries amounted to 100.9 billion cubic meters, as announced by the state gas company Gazprom. In 2021, Russia had delivered 185.1 billion cubic meters to countries outside the CIS.
Because of Western economic sanctions against Russia in response to the brutal attack on Ukraine, Moscow has severely restricted its gas exports to the EU. To offset this, Russia is scrambling to increase its gas supplies to China. So far, however, the infrastructure for this has been lacking. In addition to Russia, the CIS states include Armenia, Azerbaijan, Belarus, Kazakhstan, Moldova, Tajikistan and Turkmenistan (associated).
In December, President Vladimir Putin ceremoniously opened a new natural gas field in eastern Siberia, which should bring a noticeable increase in exports to China. A new pipeline called Kraft Siberia has been transporting gas to China since late 2019. A second pipeline – Kraft Siberian 2 – is planned to be built starting in 2024.
Gazprom CEO Alexei Miller stated that “the prospects of increasing global gas consumption are primarily linked to Asia, and primarily to China.” Deliveries to the People’s Republic would have already exceeded the contractually guaranteed quantities “at China’s request” in 2022.
Russia announced last week that its natural gas production had probably fallen by around 12 percent last year due to international sanctions. Russian Deputy Prime Minister Alexander Novak told the Russian state news agency TASS that the year-on-year decline in gas production was largely due to the shutdown of export infrastructure.
Nowak also said that the production and export of liquefied natural gas transported by ship will increase by about 8.7 percent by the end of the year. Nowak had previously said Russia could reduce its oil production by 500,000 to 700,000 barrels per day by early next year in response to Western price caps introduced earlier this month, which would translate to a 5 to 7 percent reduction in capacity.
