Russia Cuts Gas Output and Export Forecasts as Europe Nears End of Purchases

【Russia Cuts Gas Output and Export Forecasts as Europe Nears End of Purchases】

1. A draft government document shows Russia's Economy Ministry expects lower natural gas production and exports this year than previously forecast, as Europe prepares to end its final purchases of Russian gas. These projections will be used to update the federal budget through 2029.

2. According to the draft, Russia's gas production is expected to reach 683.1 billion cubic meters this year, down 5.3 billion cubic meters from the May forecast, but still above the 662.7 billion cubic meters projected for 2025. The downward revision reflects the breakdown in relations with the West due to the Ukraine war and the EU's plan to halt all Russian gas purchases starting next year.

3. For seaborne liquefied natural gas exports, Russia's shipments are expected to rise to 35 million tonnes this year from 30.3 million tonnes in 2025, but that is 5.3 million tonnes lower than previously expected. The document shows LNG exports will continue to grow in coming years, though at a slower pace than originally projected.

4. According to calculations, Russian gas exports to Europe fell 44% last year to just 18 billion cubic meters, the lowest since the mid-1970s, due to the closure of the Ukraine transit route. In 2018-2019, Russian pipeline exports to Europe peaked at around 180 billion cubic meters per year. The Kremlin said this month that Europe's choice of high-priced spot-market gas over cheaper Russian supplies was self-inflicted, and stated it was ready to resume gas supplies to Europe, including via the still-intact branch of Nord Stream.

5. Earlier this month, Russia also cut its 2026 oil production forecast to a 17-year low due to the Ukraine war, and revised its oil export expectations for this year and next.