Detour routes. How Russia sells gas on global market

In May 2024, Russian Gazprom reported an annual loss of $6.9 billion. This is the first time since 1998 that the company has posted negative results due to the suspension of gas supplies to Europe and a drop in gas prices.

Oil and gas revenues remain an important source of revenue for Russia's budget and help to keep the war in Ukraine going. Updated forecasts show an increase in oil and gas revenues by $17.4 billion to $239.7 billion. This will mean a $13 billion increase in revenues compared to 2023. At the same time, the Russian budget envisages a gradual decline in oil and gas revenues by 14% by 2027.

While oil exports bring money to the Russian budget, gas exports play a role not so much as a source of revenue for the budget as an element of political influence. In 2018-2023, 80% of Russia's oil and gas revenues came from oil.

Russia managed to quickly find buyers for oil, but the situation with natural gas is different. Pipeline gas requires the construction of infrastructure that is difficult to reorient. Gas production fell from 763 billion cubic meters in 2021 to 676 billion in 2022 and 638 billion in 2023. The forecast for gas production for 2024 is 668 billion cubic meters, and for 2025 stands at 695 billion.

Russian gas is not subject to sanctions, unlike oil, as reported by LIGA.net earlier. To reorient gas exports from Europe, the infrastructure must be prepared. How does Russia sell its gas now? There are two ways to export natural gas: through pipelines and by sea, via LNG (Liquefied Natural Gas).