Historic Low for Russian Natural Gas Exports: Gazprom Faces Unprecedented Challenges

Russian natural gas exports to Europe have plummeted to their lowest levels in 50 years, resulting in state-owned Gazprom being left with billions of cubic meters of unmarketed gas and exacerbating the financial pressure on a crucial sector of the Kremlin’s economy.

From January to June, Gazprom delivered merely 8.33 billion cubic meters of gas to its European customers, as reported by Reuters, which compiled data from TurkStream, the last remaining operational pipeline connecting Russia to Europe.

This marks a staggering 47% decrease compared to the same timeframe in 2024, positioning Russia to export under 16 billion cubic meters to Europe this year—significantly lower than the 175 billion cubic meters exported in 2021, prior to the Ukraine conflict disrupting Moscow’s energy ties with the West.

Gas exports from Russia to Europe have not been this low since the early 1970s.

By 1975, the Soviet Union was exporting 19.3 billion cubic meters a year to Europe. Just five years later, following a significant pipeline deal with West Germany, exports surged to 54.8 billion cubic meters.

The current decline is attributed to Western sanctions, political divisions, and the breakdown of Gazprom’s established export systems.

Various pipeline routes through Ukraine and Poland have been severed or rendered inactive, while liquefied natural gas (LNG) facilities are unable to fully offset the lost volumes.

The Kremlin’s much-publicized Turkish gas hub, introduced in 2022 as a solution to sanctions, has not evolved into a viable alternative.

As a result, Gazprom is inundated with gas it cannot sell. Of the 416 billion cubic meters produced in 2024, the company managed to market only 355 billion, leaving around 60 billion cubic meters unutilized — roughly equivalent to the entire annual production of the United Arab Emirates.

Attempts to redirect exports have thus far seen limited success. The Power of Siberia pipeline, which began operations in 2019, transports about 20% of the volumes that were once sent to Europe.

Discussions regarding a second pipeline have stalled, and the broader goal of shifting to Asian markets has proven more complex and lengthy than Moscow had anticipated.

With limited avenues available, Russian officials are urgently seeking domestic applications for the surplus gas.

The Far East Development Ministry has suggested channeling the excess towards powering data centers and artificial intelligence initiatives.

The Energy Ministry has proposed aiding the beleaguered coal sector by establishing gas-fired power stations near coal mines.

Additionally, the Kremlin is considering the possibility of supplying 55 billion cubic meters of gas annually to Iran, a country that already possesses the world’s second-largest reserves and oversees the South Pars field, the largest gas field globally.

Financially, Gazprom is facing increasing pressure. In 2023, the company reported a loss of 629 billion rubles ($8.2 billion) according to international financial reporting standards. Although it returned to profitability in 2024 with a net profit of 1.2 trillion rubles ($15.6 billion), the core gas division still recorded a loss of 1 trillion rubles ($13 billion).

Looking to the future, the outlook may become even more troubling.

A confidential projection from Gazprom, obtained by the Financial Times, predicts cumulative losses could reach up to 15 trillion rubles ($195 billion) over the next decade if export conditions do not improve.

This estimate indicates a prolonged period of negative cash flow, a scenario that could significantly jeopardize the Kremlin’s wider economic aspirations.