Upstream reported that Russia's gas output has recovered strongly this year, after two years of stagnation due to a sharp decline in pipeline gas exports to Europe and an initial slowdown in domestic economic activity after International sanctions against Russia because of the conflict in Ukraine.
Russia's total natural gas and associated gas production increased more than 8% to about 346 billion cubic meters in the first half of this year compared with the same period in 2023, Russia's state statistics agency Rosstat said in an annual report. month.
According to official data, gas output will reach 638 billion cubic meters in 2023 and 676 billion cubic meters in 2022, lower than the pre-conflict production between Russia and Ukraine in 2021 of 763 billion cubic meters.
The recovery comes as Russian gas exports increase through pipelines to China and through the old pipeline network to Uzbekistan. In addition, strong gas demand from domestic power plants and fertilizer factories also contributed to increased output, according to Dmitry Kasatkin, partner at consulting firm Kasatkin Consultancy in Moscow.
In an unusual development, Russia appears to be benefiting from the closure of several European fertilizer producers due to a spike in gas prices following the Ukraine conflict.
Russian producers have stepped up fertilizer exports to Europe to meet demand on the continent, increasing production of ammonia, urea and other inputs, thereby consuming more gas.
Russian oil and gas corporation Gazprom has gradually increased gas exports to China through the Power of Siberia pipeline. Gazprom expects to reach maximum contracted capacity of 38 billion cubic meters by 2025.
Besides, Gazprom signed a contract to supply gas to Uzbekistan. The gas giant also maintains a stable pipeline gas supply to Europe through the remaining two gas pipeline routes through Ukraine and through the TurkStream pipeline under the Black Sea to Türkiye.
Russia's domestic gas demand also increased as power plants needed more fuel amid increased demand for air conditioning during hot weather.
In addition, Russian fertilizer producers have significantly increased production and exports to Europe, thus also using more gas in the process.
Russian authorities cap Gazprom's domestic gas prices at a fraction of the price of gas exported to Europe, and many independent companies such as Novatek often market gas to domestic consumers at even lower prices. ceiling price.
According to analyst Dmitry Kasatkin, Russia's gas production increased after extremely high spot gas prices in Europe in 2022 and early 2023 made fertilizer production unprofitable due to high costs and some manufacturers. European factories had to close.
However, Russia has offered less expensive alternatives and the EU's imports of ammonia and urea from Russia - used to make fertilizers - have increased by double digits since 2022, according to the agency. Eurostat statistics of the European Commission.
According to Eurostat, the continent imported twice as much urea from Russia in the year to June 2023 compared to a year earlier.
Rosstat also reported a nearly 5% increase in liquefied natural gas (LNG) output in the first half of 2024 at four operating export projects, Yamal LNG, Sakhalin 2, Prigorodnoye LNG and Vysotsk LNG, to a total 17.3 million tons.
With LNG production increasing, Russia has also begun building its own LNG tanker fleet to transport gas to international customers.
