The Russian gas company Gazprom may face a long period of poor performance as it attempts to fill the gap left by the European boycott through domestic markets and exports to China.
Once the most profitable Russian company, it recently reported an annual net loss of seven billion dollars, the first since 1999, following a sharp decline in trade with Europe.
Gazprom’s problems reflect the deep impact that European sanctions have had on the Russian gas industry, as well as the limitations of the increasingly close partnership with China.
Moscow has more easily absorbed the impact of international sanctions on oil exports as it has managed to redirect exports via sea routes to customers outside Europe.
Gazprom relied on Europe as its largest sales market until 2022 when the conflict between Russia and Ukraine prompted the EU to reduce Gazprom’s gas imports.
In 2022, Russia delivered a total of about 63.8 billion cubic meters (bcm) of gas to Europe via various routes, according to Gazprom data and calculations by Reuters. The volume further decreased last year by 55.6 percent to 28.3 bcm.
In 2018, Gazprom exported 200.8 bcm to the EU and other countries, such as Turkey.
Mysterious explosions on the Nord Stream underwater pipelines, which connected Russia and Germany, in September 2022 also significantly undermined Russian-European gas trade.
Russia then turned to China, seeking to increase its gas sales through pipelines to 100 bcm annually by 2030.
Gazprom began supplying gas to China via the Power of Siberia pipeline at the end of 2019. It plans to reach the annual capacity of that pipeline, of 38 bcm, by the end of this year, while Moscow and Beijing agreed in 2022 to export 10 bcm from the Pacific island of Sakhalin.
