They were painstakingly built over decades and were the main source of income for Kremlin. Today, however, the trade links that linked Russia with Europe thanks to Russian natural gas are among the victims. Ukraine war and are not going to recover. Since the Russian president launched a “special forces operation” in Ukraine nearly a year ago, a combination of Western sanctions on the Kremlin and Moscow’s decision to cut off supplies to Europe has resulted in exports plummeting. Russian energy.

last wave sanctionsThe US, including limiting the price of Russian oil, is expected to further reduce black gold trade, but it is clearly easier for Moscow to find other markets for its oil than for Russian natural gas. Natural gas exports from Russia to Europe depended on thousands of kilometers of pipelines from Siberia to Germany and beyond. Until last year, Western markets were bound by long-term supply contracts from Russia. In an interview with Reuters, Yuri Safranik, who served as Russia’s energy minister from 1993 to 1996, stressed that “the loss of the European gas export market is certainly a big test for Russia.” The former top manager was much more straightforward. Gazpromwho stressed that “the work of the hundreds of people who built this export system has gone to waste.”

However, for the employees of the Russian giant, everything works like clockwork. “Nothing has changed for us,” emphasizes one of the Gazprom executives, who requested anonymity because he is not authorized to speak to the international press. As he clarified, the staff of the Russian giant “has received a two-fold increase in salaries over the past year.” The discussion took place in the Arctic city of Novy Urengoy, often referred to as the “gas capital of Russia” because it was built to serve the largest gas fields. The giant Gazprom was founded in 1989, when the Soviet Union was at the height of its popularity, and was chosen by then Energy Minister Viktor Chernomyrdin. As Safranik points out, “Chernomyrdin did not allow anyone to stick his nose into Gazprom, which was something like a state within a state and in many ways remains to this day.”

According to Ursula von der Leyen, Russia has reduced gas supplies to the EU. by 80% in the first eight months after the invasion of Ukraine.

According to Reuters estimates, the Russian giant’s revenue fell to $3.4 billion in January from $6.3 billion in the same period a year earlier. Combined with forecasts for exports and the average gas price, it is expected to halve this year, pushing up a $25 billion budget deficit, Russia announced last month. Gazprom’s exports have already halved over the past year, reaching a post-Soviet record low. And the downward trend continues this year. Commission President Ursula von der Leyen believes that Russia has reduced gas supplies to the EU. by 80% in the first eight months after the invasion of Ukraine. As a result, by the end of last year, Russia provided only 7.5% of Western Europe’s gas needs, compared with 40% a year earlier.

Before the war in Ukraine, Russia thought it could export more gas to Europe. In 2019, Elena Burmistrova, head of Gazprom’s export department, called the Russian giant’s record of exporting more than 200 billion cubic meters in 2018 a “new reality”. However, last year its exports barely exceeded the mark of 100 billion cubic meters. Washington has criticized Germany for years for its energy dependence on Russia, and Berlin has argued that it was a means to improve bilateral relations. For his part, Putin has been trying to find alternative markets for Russian gas since before the war, but he has recently stepped up efforts. In October, he mentioned the idea of ​​a gas hub in Turkey to divert fuel flows from the Baltic and northwestern Europe. After all, Russia is trying to increase gas exports to China, which is the world’s largest consumer of energy and the largest buyer of crude oil, liquefied natural gas and coal. It began sending gas there at the end of 2019 via the Power of Siberia pipeline, and Russia plans to increase its exports to 38 billion cubic meters. annually from 2025. After all, Moscow has agreed with Beijing to provide an additional 10 billion square meters. annually through the pipeline currently under construction on Sakhalin Island. Meanwhile, Russia is planning to lay a second Power of Siberia No. 2 gas pipeline from Western Siberia, which would theoretically provide China with another 50 billion cubic meters. annually. It remains to be seen whether such a relationship will be as lucrative as Europe’s gas supplies have been for decades.