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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Russian Natural Gas Production Expected To Hit All-Time High This Year

Russia’s natural gas production is expected to hit an all-time high this year, beating the 2021 record, yet this winter season’s deliveries to Europe have been much lower than usual.

In 2021, Russia’s natural gas production is estimated to have increased by 10 percent year over year to reach a record of 762 billion cubic meters (bcm), the International Energy Agency (IEA) said in its quarterly Gas Market report on Monday.

Gas giant Gazprom alone accounted for 80 percent of the rise in gas production, with its output nearing 513 bcm. This was the highest level since 2008, although below the company’s official production capacity of 550 bcm, the IEA said.

In 2022, estimates from the agency point to Russian natural gas production reaching another record of 763 bcm.

Despite the record-high production of natural gas, Russia has not been sending much above its contractual obligations to Europe this winter season. This, combined with low storage levels at European sites, has resulted in a natural gas crunch in Europe and record-high prices that pushed up power prices and burdened many energy-intensive businesses in Europe.

In the fourth quarter of 2021, Russia’s pipeline exports declined by close to 25 percent annually due to lower transit flows via Belarus and Ukraine and reduced deliveries to Turkey, the IEA said in its quarterly report.

The agency was among the many voices in the industry to blame Russia for the energy crisis in Europe.

Low natural gas deliveries from Russia appear to have artificially tightened the European gas market, the IEA’s Executive Director Fatih Birol said earlier this month, adding that energy systems “face significant risks” by relying too much on one supplier for a key energy source.

“We see strong elements of ‘artificial tightness’ in European gas markets, which appears to be due to the behaviour of Russia’s state-controlled gas supplier,” Birol wrote in a LinkedIn post this month.

The Russia-Ukraine crisis is another concern for gas market and commodity analysts. A military action could disrupt Russian supply to Europe, while the U.S. could ax the still-waiting-to-become-operational Nord Stream 2 pipeline if Russia invades Ukraine.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on January 31 2022 said:
    Even the European Union Secretariat has acknowledged that Russia has fulfilled its contractual gas obligations to Europe. But Russia isn’t obliged to ship additional gas supplies to the EU without long-term contracts and without a certification of Nord Stream 2 gas pipeline.

    Moreover, it isn’t Russia that caused gas prices to skyrocket, it is the hasty EU policies to accelerate energy transition at the expense of fossil fuels and the hapless IEA’s net-zero emissions 2050 roadmap calling for immediate halt to investment in oil and gas. These policies along with a mismanagement of the gas market by the EU and ineptitude in filling its gas storage ahead of winter led to skyrocketing gas prices and a shift from gas to coal. That is why coal is now enjoying a renaissance.

    Moreover, Russia isn’t dependent on the EU gas market to for its gas exports. Russian gas exports to China have been breaking all previous records. If the EU wants to politicize energy under intensive pressure from the United States, that is its own affair but it shouldn’t blame Russia for its deepening energy crisis.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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