The Current State and Prospects for the Development of the Russian Gas Industry in a New Geopolitical Landscape

Abstract

The relevance of the research into the current state and directions of development of the Russian gas industry arises from factors influencing it. These include aging equipment, depletion of gas reserves in large fields, insufficient maneuverability, as well as profound shocks caused by the global economic crisis and changes in the geopolitical landscape worldwide. In this regard, it is crucial to add another dimension to the two main areas of the gas industry development (smart energy systems and integrated energy systems). This is research into the prospects for the use of Russian gas (exports and increasing domestic consumption) in the new geopolitical context. This paper also raises questions about the institutional organization of the gas industry and, as a consequence, problems in its management. The study examines the current state of Russian pipeline natural gas exports to the European Union and the East, in particular to China. It is also noted that there is a reduction in gas supplies to Europe due to the sanctions imposed by the EU and the USA in connection with the change in the geopolitical situation caused by the special military operation started on February 24, 2022. The main difficulties encountered by Russian gas companies are related to changes in logistics, i.e., the need to redirect gas export flows from the West to the East. In addition to the fact that the existing gas industry infrastructure is designed to supply gas to the countries located to the West of Russia, many eastern gas markets are too distant geographically or focused on the supply of liquefied natural gas. China is not yet a full partner in the gas sector. Domestic gas consumption requires large investments both in the expansion of gas infrastructure and in the construction of gas processing plants in the country. Nevertheless, possible directions for the program of gas industry development in the coming years were formulated. Not all of the areas mentioned can be implemented and many of those that are possible may require additional investments and government support, especially since Western sanctions can potentially last for 3-5 years.