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Warning: Pipes are shutting down imminently.

Russia braces for billions in losses due to EU gas embargo, shifting exports to alternative markets in response.

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4 min read
Economic sanctions imposed by the EU on Russian gas will result in substantial financial losses for...
Economic sanctions imposed by the EU on Russian gas will result in substantial financial losses for our nation, amounting to billions of dollars. Russia, in response, will restructure its supply chains and boost exports to other global markets.

Warning: Pipes are shutting down imminently.

In the face of tightening sanctions from the European Commission and the demise of the "Northern Stream," Russia managed to export a substantial 51.7 billion cubic meters of gas to Europe in 2024, with an impressive 150 billion cubic meters shipped in 2021[1]. According to Sergei Ermilov of Rexoft Consulting, these deliveries slid in at around $20 billion due to an average gas price of $387 per thousand cubic meters in the European market[1]. With such impressive numbers, Russia comfortably secured the number two spot in EU natural gas supplies, surpassing the United States and trailing only Norway[1].

However, maintaining these high levels going into 2025 appears to be a challenging feat under the circumstances. Besides the EU's actions, the cessation of gas supplies through Ukraine via the Urengoy - Pomary - Uzhgorod pipeline since the beginning of the year is also a major impediment[2]. Explaining the situation, Igor Yushkov, a leading analyst at the Fund for National Energy Security, emphasizes that around 18 billion cubic meters of Russian gas transited through Ukraine in 2024. Tragically, Kyiv declined to extend the transit agreement with Gazprom at the end of last year, necessitating a halt in gas supplies via this route from January 1, 2025[2]. Furthermore, the destruction of the gas metering station Sudzha in Kursk Oblast by Ukrainian forces on March 28, 2025, has effectively terminated any theoretical possibility of resuming pipeline gas supplies to the EU through this pipeline[2].

Regarding LNG deliveries, data from the Brussels European and Global Economics Laboratory indicates that Russia had supplied approximately 10 billion cubic meters of gas, mostly from the "Yamal LNG" plant, to Europe by the end of the first quarter of 2025[2]. With a value around $3 billion, this total is a fraction of the billion-cubic-meter levels witnessed in the preceding year[1]. Interestingly, the U.S. Treasury Department's sanctions on two mid-tonnage Russian LNG plants - "Cryogas-Vysotsk" and "Portovaya" - have effectively halted their operations, leaving LNG supplies to the EU essentially limited to the "Yamal LNG" plant[2].

Igor Yushkov explains that French company Total Energies controls 20% of "Yamal LNG," as well as approximately 20% of NOVATEK, the controlling shareholder of "Yamal LNG." This ownership stake ensures that "Yamal LNG" continues to operate without sales issues[2]. With a project capacity of 17.4 million tons, the plant actually produces over 20 million tons of LNG, most of which is sold in Europe[2].

Interestingly, some European nations, like Hungary and Slovakia, are outright resisting the initiatives to ban Russian pipeline and LNG gas imports[2]. French businesses are also expected to join the resistance, putting pressure on the EU to change course. However, Oliver Varhelyi, Hungarian EU commissioner, has already filed a procedural objection to these plans.

Despite Europe's best efforts to phase out Russian gas, a total ban would temporarily result in consistently high gas prices in the European market. Russia, on the other hand, would be left with a substantial pipeline gas surplus[2]. In the worst-case scenario, NOVATEK companies could be forced to redirect around 15 million tons of LNG. This may involve exploring unconventional markets like Vietnam, Thailand, Bangladesh, and Pakistan[3].

However, this is only a temporary solution. As more LNG production capacities come online in the US, Middle East, Africa, and Australia over the next five years, competition will drive down global LNG prices, forcing Russian gas companies to cut costs by reducing production and transportation expenses[3]. In an effort to maintain market share, Gazprom may accelerate gas exports via the "Power of Siberia" pipeline and construct the "bridge" in the Krasnoyarsk region to transport Yamal and Gydan field gas to Asian markets[3].

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European Union #Gas #Export #Sanctions #Logistics

[1] Bulgarin, A., & Fedyunina, D. (2024, March 28). Bulletin № 17/2025 - Supply and Export of Russian Gas in 2021-2024.

[2] Expert. (2025, April 5). Russia is losing the gas war with Europe.

[3] Kemp, J. (2025, May 3). EU plans to cut off Russian gas imports face challenges. Reuters.

  1. The European Union, in an attempt to phase out Russian gas, is facing resistance from countries like Hungary and Slovakia, who are outright resisting the initiatives to ban Russian pipeline and LNG gas imports.
  2. French businesses are also expected to join the resistance, putting pressure on the EU to change course, with Hungarian EU commissioner, Oliver Varhelyi, already filing a procedural objection to these plans.
  3. Despite Europe's best efforts to completely sever ties, a total ban would temporarily result in consistently high gas prices in the European market, while Russia, on the other hand, would be left with a substantial pipeline gas surplus.
  4. In the worst-case scenario, NOVATEK companies could be forced to redirect around 15 million tons of LNG, potentially exploring unconventional markets like Vietnam, Thailand, Bangladesh, and Pakistan.
  5. As more LNG production capacities come online in the US, Middle East, Africa, and Australia over the next five years, competition will drive down global LNG prices, forcing Russian gas companies to cut costs by reducing production and transportation expenses.
  6. In an effort to maintain market share, Gazprom may accelerate gas exports via the "Power of Siberia" pipeline and construct the "bridge" in the Krasnoyard region to transport Yamal and Gydan field gas to Asian markets.

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