ECONOMY
Having Exited Europe, Gazprom Has Nowhere to Go
May 16, 2025
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Mikhail Krutikhin
Oil and gas market expert
Energy expert Mikhail Krutikhin looks at Gazprom’s latest problems in Europe, where Russian gas exports have dropped to historical lows, but also points out the gas monopoly’s uncertain prospects in China and around the Caspian and Black seas.
The original text in Russian was published in the Moscow Times and is being republished here with the author’s permission.
The routes of the Power of Siberia pipeline (left), the Sakhalin–Khabarovsk–Vladivostok pipeline (right) and the proposed link between them (centre). Source: Wiki Commons
“Well, we have raised this issue with the Americans,” said Putin’s international affairs advisor Yuri Ushakov in response to a question about whether Russia and the US are really discussing the resumption of Russian gas exports to Europe. Reuters has reported these discussions, citing as many as eight unnamed sources.
Support for the restoration of gas supplies through the Nord Stream pipelines has been repeatedly voiced by certain German politicians, who predictably come from the Putin apologist crowd. In addition, Slovak PM Robert Fico has called for Russian gas to start flowing through Ukraine again.
Officials in Moscow claim the Chinese may agree to import gas via the Power of Siberia 2 pipeline, which Beijing has been lukewarm on for years now. Another promising route for Gazprom is said to be Iran, which is supposedly ready to take up to 55 bcm a year. And for the Bulgarian section of the Turkish Stream pipeline, a US investor, rumors have it, has been found who wants to ramp up deliveries of Russian gas.
This wish list in the media reflects the desperate situation of the Russian gas export monopoly. Having started winding down its European presence in 2021 on orders from the Kremlin, Gazprom gas exports to the continent have fallen from 157 bcm to 54 billion in 2024, and this year they may turn out to be less than 40 bcm. They are at their lowest in 45 years.
The transformation of Gazprom into an instrument of political blackmail has been costly for the company. Its losses from exiting the European market are estimated at $40 billion a year, and its frenzied efforts to find new markets have failed to find success.
The Europeans, who have been given plenty of reasons to doubt the reliability of Gazprom as a partner, look determined not to repeat past mistakes. The European Commission has doubled down on its REPowerEU plan, adopted in 2022, recently presenting a roadmap “to ensure the EU fully ends its dependency on Russian energy,” including a ban on all Russian gas and LNG imports by end-2027 and restrictions on uranium and other nuclear material imports.
As for restarting the Nord Stream pipeline, the German government’s oft-declared position is basically categorical refusal. In this case, US investors who might be tempted by the prospect of serving as a middleman between the discredited Gazprom and Europe are not on the radar screen. Plus, Europe is doing just fine without Russian gas – if you leave out Serbia, Hungary and Slovakia, countries with Russia-friendly governments. But even they will need to fall in line with EU regulations by 2027 and wean themselves off Russian gas.
Meanwhile, China remains lukewarm on Power of Siberia 2. Deputy PM Alexander Novak seemed to have interpreted the Chinese position very freely when he said that Putin and Xi had given instructions to speed up the project’s realization. In reality, it was not “realization” but rather the nonbinding negotiations on the project that the leaders ordained to accelerate. There are no agreements on this pipeline in place currently, and none are expected in the near term.
Support for the restoration of gas supplies through the Nord Stream pipelines has been repeatedly voiced by certain German politicians, who predictably come from the Putin apologist crowd. In addition, Slovak PM Robert Fico has called for Russian gas to start flowing through Ukraine again.
Officials in Moscow claim the Chinese may agree to import gas via the Power of Siberia 2 pipeline, which Beijing has been lukewarm on for years now. Another promising route for Gazprom is said to be Iran, which is supposedly ready to take up to 55 bcm a year. And for the Bulgarian section of the Turkish Stream pipeline, a US investor, rumors have it, has been found who wants to ramp up deliveries of Russian gas.
This wish list in the media reflects the desperate situation of the Russian gas export monopoly. Having started winding down its European presence in 2021 on orders from the Kremlin, Gazprom gas exports to the continent have fallen from 157 bcm to 54 billion in 2024, and this year they may turn out to be less than 40 bcm. They are at their lowest in 45 years.
The transformation of Gazprom into an instrument of political blackmail has been costly for the company. Its losses from exiting the European market are estimated at $40 billion a year, and its frenzied efforts to find new markets have failed to find success.
The Europeans, who have been given plenty of reasons to doubt the reliability of Gazprom as a partner, look determined not to repeat past mistakes. The European Commission has doubled down on its REPowerEU plan, adopted in 2022, recently presenting a roadmap “to ensure the EU fully ends its dependency on Russian energy,” including a ban on all Russian gas and LNG imports by end-2027 and restrictions on uranium and other nuclear material imports.
As for restarting the Nord Stream pipeline, the German government’s oft-declared position is basically categorical refusal. In this case, US investors who might be tempted by the prospect of serving as a middleman between the discredited Gazprom and Europe are not on the radar screen. Plus, Europe is doing just fine without Russian gas – if you leave out Serbia, Hungary and Slovakia, countries with Russia-friendly governments. But even they will need to fall in line with EU regulations by 2027 and wean themselves off Russian gas.
Meanwhile, China remains lukewarm on Power of Siberia 2. Deputy PM Alexander Novak seemed to have interpreted the Chinese position very freely when he said that Putin and Xi had given instructions to speed up the project’s realization. In reality, it was not “realization” but rather the nonbinding negotiations on the project that the leaders ordained to accelerate. There are no agreements on this pipeline in place currently, and none are expected in the near term.
“What Gazprom is actually doing in the East is trying to save the original, already-built Power of Siberia pipeline and to meet its existing contractual obligations.”
Under the guise of gasifying the Russian provinces, it is piecemeal constructing the Russian part of Power of Siberia 2. In the meantime, in irregular negotiations Moscow is trying to persuade Beijing to take additional volumes of gas, offering huge discounts.
Exporting gas to Iran is no panacea for Gazprom either. In fact, such expectations look groundless. Firstly, the Islamic republic is not ready to serve as a reexportation hub for Russian gas – it has more than enough gas of its own, and there are virtually no possibilities to sell it abroad.
Secondly, it makes no commercial sense to sell Russian gas on the domestic Iranian market, given the extremely low, subsidized prices. Thirdly, the existing gas transportation infrastructure of the route from Russia to Iran, which goes through Azerbaijan, is designed to pump a maximum of 2.8 bcm a year, and the construction of new main pipelines requires time, money and the consent of Azerbaijan (which looks dubious, especially in the context of the ongoing spat over Russia shooting down an Azerbaijani plane over Grozny).
Could Gazprom ramp up supplies to the EU via Turkish Stream? Even if the abovementioned US investor’s interest in the Bulgarian section is serious, this will not affect the flow of gas from Russia via this route. What really changes the game on this route is Turkey’s intention to build a gas hub, from which a Turkish “mix,” not Gazprom gas, will flow to the EU through Bulgaria. The Turks intend to establish themselves as a major gas supplier, taking gas not only from Russia but also from Azerbaijan, Iran, Turkmenistan (under a swap scheme through Iran) and several LNG sources. In addition, Turkey is expanding its own gas production in the Black Sea. Overall, Gazprom cannot be sure about the future of this part of its business.
The overall picture does not look pretty for Gazprom. Russia’s colossal gas reserves (the largest in the world) are unable to be monetized currently. No one trusts Russia and Gazprom as a supplier. If by some miracle something is achieved with the Chinese, earnings from these exports will not cover either the construction of the needed gas transportation infrastructure or even the operating costs of the gas production and transportation. This hardly resembles a business.
Exporting gas to Iran is no panacea for Gazprom either. In fact, such expectations look groundless. Firstly, the Islamic republic is not ready to serve as a reexportation hub for Russian gas – it has more than enough gas of its own, and there are virtually no possibilities to sell it abroad.
Secondly, it makes no commercial sense to sell Russian gas on the domestic Iranian market, given the extremely low, subsidized prices. Thirdly, the existing gas transportation infrastructure of the route from Russia to Iran, which goes through Azerbaijan, is designed to pump a maximum of 2.8 bcm a year, and the construction of new main pipelines requires time, money and the consent of Azerbaijan (which looks dubious, especially in the context of the ongoing spat over Russia shooting down an Azerbaijani plane over Grozny).
Could Gazprom ramp up supplies to the EU via Turkish Stream? Even if the abovementioned US investor’s interest in the Bulgarian section is serious, this will not affect the flow of gas from Russia via this route. What really changes the game on this route is Turkey’s intention to build a gas hub, from which a Turkish “mix,” not Gazprom gas, will flow to the EU through Bulgaria. The Turks intend to establish themselves as a major gas supplier, taking gas not only from Russia but also from Azerbaijan, Iran, Turkmenistan (under a swap scheme through Iran) and several LNG sources. In addition, Turkey is expanding its own gas production in the Black Sea. Overall, Gazprom cannot be sure about the future of this part of its business.
The overall picture does not look pretty for Gazprom. Russia’s colossal gas reserves (the largest in the world) are unable to be monetized currently. No one trusts Russia and Gazprom as a supplier. If by some miracle something is achieved with the Chinese, earnings from these exports will not cover either the construction of the needed gas transportation infrastructure or even the operating costs of the gas production and transportation. This hardly resembles a business.
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