Monetizing Gas in the Era of Sanctions and Energy Transition
2022 marked a turning point for Russian gas. The loss of the European market (a 51% drop in pipeline exports to 101 bcm) and sanctions against LNG projects forced the industry to seek new ways to monetize resources 1 3 . Russia now faces a complex choice: where to direct excess volumes of "blue fuel"? The focus is on three strategies: expanding LNG exports, developing gas chemistry, and stimulating domestic demand.
With the loss of Europe, China has become the main hope. In 2024, supplies via Power of Siberia grew by 35%, reaching 31 bcm, and by 2025 will reach the project maximum of 38 bcm 4 . Parallel development of new routes:
| Direction | 2021 (bcm) | 2024 (bcm) | Change |
|---|---|---|---|
| Europe (pipeline) | 185 | 101 | â–¼ 45% |
| China (Power of Siberia) | 16 | 31 | â–² 94% |
| LNG (total exports) | 33 million tons | 47.2 million tons | â–² 43% |
Controls 12.1% of gas production in Russia. Its Yamal LNG plant produced 21 million tons in 2024, accounting for 60% of national production 2 .
Target of 100 million tons of LNG per year (20% of global market). But sanctions have already reduced capacity forecasts from 250 million tons to 70 million tons 3 .
The EU banned transshipment of Russian LNG in its ports from March 2025, blocking the supply scheme through France and Belgium. The alternative is direct flights to Asia, but this requires an icebreaker fleet and new gas carriers 9 .
Processing gas into value-added products is a strategic response to sanctions. In 2022-2023, ammonia exports from Russia fell 7 times (from 4.4 million tons to 0.6 million tons) due to the blocking of the Togliatti-Odessa ammonia pipeline 1 . But the industry is adapting:
Urea units were launched at Togliattiazot (0.7 million tons) and KuibyshevAzot (0.5 million tons), increasing ammonia consumption by 10% 1 .
Uralchem is building a terminal on the Black Sea for ammonia exports to Asia and Africa 1 .
| Parameter | 2024 | Forecast to 2035 |
|---|---|---|
| Global consumption | 232 million tons | 260 million tons |
| Russia's share in production | 18 million tons | 22-25 million tons (estimate) |
| Key sales markets | Asia-Pacific (55% demand), Latin America (1.5% annual growth) | |
The growth of gas consumption within the country is a key hedge against export risks. In 2024, domestic demand grew by 4.2%, to 516 bcm 4 . Drivers:
The level reached 74.7% in 2024 (+0.9 p.p. per year). 303,000 households were connected in a year 4 .
| Indicator | 2024 | Plan for 2025 |
|---|---|---|
| Filling stations | 387 (capacity) | +56 new facilities |
| Regions with tax benefits | 29 | 33 (including new ones) |
| LNG as GMF sales | 40 thousand tons | 60-70 thousand tons (estimate) |
Without development of hard-to-recover reserves, gas production in Russia could halve by 2040 5 .
Improving the efficiency of gas processing into hydrogen or methanol without high energy costs.
The technology reduces gas chemistry costs by 15-20%, which is critical for competition with the Middle East.
| Reagent/Material | Function | Example Application |
|---|---|---|
| Amines (MEA, DEA) | Absorption of COâ‚‚ and Hâ‚‚S from gas | Feed purification before liquefaction |
| ZSM-5 type zeolites | Cracking catalyst | Gasoline production from gas condensate |
| Nickel-zeolite catalysts | Methane conversion to hydrogen | Reforming for gas chemistry |
| Cryogenic mixtures | Gas cooling to -160°C | Liquefaction at LNG plants |
| Cellulose acetate membranes | Separation of gas mixtures | Helium extraction from natural gas |
Accelerating construction of Power of Siberia 2 and LNG plants for Asia.
Investments in gas chemical clusters on the coast (e.g., in Taman) for ammonia and methanol exports.
Development of domestic catalysts and equipment for hard-to-recover reserves.
"For Russia, it is critical to combine LNG logistics flexibility with breakthroughs in gas chemistry. Only then will 'blue gold' remain a source of prosperity in the energy transition era," notes Igbal Guliyev from MGIMO 7 . Sanctions are not a dead end, but a stimulus to rethink gas value in new realities.