Key findings
 

• Russia’s natural gas industry has lost its pre-2022 European export model.

• Pipeline gas exports to Europe, including Turkey, fell from 185.1 bcm in 2021 to 16.8 bcm in 2025.

• Exports to China are growing but cannot replace Europe in volume, profitability or infrastructure logic.

• Gazprom and Novatek remain major contributors to Russia’s federal budget and war financing.

• LNG exports remain Russia’s most important surviving gas revenue channel.

• Sanctions have constrained new Russian LNG projects, but operating LNG projects continue to generate revenue.

• Environmental deregulation has become a cost-cutting strategy under wartime economic pressure.

• Gazprom has stopped publishing full sustainability and emissions reporting.

• Methane emissions from Russia’s fossil fuel infrastructure require independent satellite monitoring.

• European sanctions and energy policy will be credible only if the Russian gas phase-out is enforced across the supply chain

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​About the report

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Russia’s full-scale invasion of Ukraine has pushed the Russian natural gas industry into its deepest crisis since the collapse of the Soviet Union. Before 2022, Europe was the core of Gazprom’s business model: it provided high-margin pipeline exports, hard currency, federal budget revenue and geopolitical leverage. That model has now largely broken down.

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This analytical report examines Russia’s gas sector after 2022 as a strategic system under pressure: a source of war financing, a weakened export business, a geopolitical tool and a growing climate risk. The report focuses on Gazprom and Novatek, Russian gas exports to Europe and China, LNG revenues, sanctions, environmental deregulation, methane emissions and new opportunities for independent satellite monitoring.

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The report is particularly relevant for European policymakers, journalists, sanctions experts, climate specialists and researchers working on Russia’s wartime economy, fossil fuel exports and environmental governance.

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Executive summary

 

Russia’s natural gas industry has lost the export model that sustained its financial power for decades. Russian pipeline gas supplies to Europe, including Turkey, fell from 185.1 bcm in 2021 to 16.8 bcm in 2025.

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Before the full-scale invasion of Ukraine, Europe was Gazprom’s largest and most profitable market. It provided high-margin pipeline sales, hard currency, budget revenue and political leverage.
After 2022, this model collapsed.

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Exports to China are growing, but they cannot replace Europe in volume, profitability or infrastructure logic. Russian gas exports to China increased from 10.4 bcm in 2021 to 38.8 bcm in 2025, but they are supplied under conditions that appear much less profitable than former European contracts.

 

Large parts of Gazprom’s upstream production and trunk pipeline infrastructure, originally designed for exports to Europe, are now stranded or underused.

 

Gazprom and Novatek remain major contributors to Russia’s state budget and war effort. In 2024–2025, they accounted for around 10% of federal budget revenue and 6.7% of consolidated budget revenue. Their combined annual tax payments in 2024–2025 amounted to the equivalent of 2.1% of Russia’s GDP

 

In 2024 - 2025, Gazprom and Novatek contributed on average approximately USD 50 billion, in tax payments — roughly 35% of Russia’s military budget for 2025.

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This makes the EU phase-out of Russian gas strategically important. If implemented by the end of 2027, it will further reduce the profitability of Russian gas exports and weaken the ability of Gazprom and Novatek to generate revenue for the Russian state and its war against Ukraine.

 

The credibility of Europe’s sanctions and energy security strategy will depend on whether this phase-out is enforced in practice, including against indirect Russian gas flows and possible origin-masking schemes. LNG exports remain the most important surviving revenue channel in Russia’s gas business.

 

In 2024, Russia exported a record 33.6 million metric tonnes of LNG, earning more than USD 20 billion from international markets. In 2025, Russian LNG exports declined slightly to 31.3 million metric tonnes.

 

Yamal LNG remained central to the structure of Russian LNG exports, with a large share of supplies still delivered to Europe. Existing operating LNG projects — primarily Yamal LNG and Sakhalin-2 — remain crucial for Russia’s foreign currency earnings.

 

Sanctions against new Russian LNG projects have had a major impact. Gazprom and Novatek were forced to suspend or delay planned LNG projects, effectively limiting Russian LNG exports to existing plants. However, sanctions against new projects are not sufficient if operating LNG projects and their shipping, transshipment and contractual channels remain largely untouched.

 

The crisis of the gas sector also has environmental and climate consequences. Since 2022, Russian industrial lobbies have used war and sanctions as arguments for weaker environmental regulation, delayed modernization and reduced transparency. Environmental deregulation has become part of the Russian government’s policy response to sanctions and wartime economic pressure.

 

The weakening of environmental accountability takes several forms: relaxation of environmental protection requirements, restrictions on independent environmental oversight, reduced transparency and lower quality of pollution and emissions data.

 

Public Environmental Expertise has effectively been brought under state control. Gazprom has also stopped publishing full sustainability and emissions reporting, limiting public access to data on pollution and greenhouse gas emissions.

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Methane is the most immediate and measurable climate risk associated with Russia’s fossil fuel infrastructure. Russia is one of the world’s leading methane emitters, but estimates of methane emissions differ significantly. The International Energy Agency estimated Russian methane emissions at 14 million tonnes in 2024, while Russia’s national greenhouse gas inventory reported a lower figure for 2023. Independent experts estimate that Russian methane emissions may be significantly higher.

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New satellite tools make independent monitoring increasingly important. Tanager-1, Carbon Mapper and NASA FIRMS allow researchers to identify methane plumes at specific oil and gas facilities and compare them with thermal signals from flaring. In some cases, satellite data indicate direct methane releases from flare systems instead of combustion, which has a much greater climate impact than ordinary flaring.

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The crisis of Russia’s gas sector is therefore economic, fiscal, geopolitical and environmental at the same time. Western policy should treat the phase-out of Russian gas, restrictions on LNG expansion, enforcement against indirect Russian gas flows and origin-masking risks, and independent methane monitoring as parts of one strategy.

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