January 2024 has come and gone, bringing with it the customary release of the final statistical data on corporate activity for the preceding year, 2023. Mykhailo Gonchar speculates on the possible collapse of Gazprom.

In Russia, where leading corporations are state-owned, the landscape is markedly different. Many data sets from state-owned enterprises ceased to be published under Kremlin directives following the onset of Russian aggression against Ukraine in 2014.

By 2022, the situation had become reminiscent of the Soviet era – information tightly controlled and dissemination restricted. Though some statistical data sporadically surfaces, its credibility remains dubious.

It is often remarked that there are truths, falsehoods, and then there are Russian statistics – a sentiment particularly apt in the energy sector.

Vladimir Putin & Alexander Novak. Photo: Kremlin.

Recently, Putin’s deputy prime minister and former energy minister, Novak, unveiled the gas results for 2023. According to him, ‘2023 marked a year of stabilisation in the gas industry.’ Let’s scrutinise what this stabilisation truly entails.

The TASS agency reported, ‘in 2023, the export of pipeline gas amounted to 99.6 billion cubic metres.

However, just two weeks prior, Novak’s article in the journal “Energy Policy” cited the figure of 91.4 billion cubic metres.’

Deciphering which figure accurately reflects the previous year’s results – whether the earlier cited 91.4 or the refined and corrected 99.6 – proves confounding. Most likely, both are flawed.

Yet clarity emerges through comparison. It is imperative to evaluate progress, in this instance, Putin’s progress, as fervent believers assert that it was Putin who salvaged Russia from its nadir, courtesy of the oil and gas sector.

TASS provided a comparative figure for Russia’s record gas exports – 206.8 billion cubic metres in 2021.

However, it omitted another significant figure crucial for a comprehensive overview.

This can be found in the reference book “USSR and the Countries of the World in Figures,” revealing that gas export levels ranging from 90-100 billion cubic metres per year were achieved in the Soviet Union by the late 1980s, precisely 35 years ago.

This regression – a return to the USSR era – was orchestrated by Putin, the former KGB officer from St. Petersburg, for Russia’s benefit.

Returning to Novak’s gas statistics, he proudly proclaimed that ‘LNG exports in 2023 amounted to 45.4 billion cubic metres.’ Although slightly less than the 46.3 billion cubic metres recorded in 2022, the figure remains commendable.

Recalling an intriguing presentation by Gazprom in early 2006, the corporate vision outlined the trajectory of gas exports for the national treasure – or as the Kremlin preferred to dub it, “Gazprom” – in the years 2015-2020.

Although 2015 and 2020 are now in the past, the chasm between Kremlin aspirations and reality remains stark.

Gazprom endeavoured to illustrate the prospect of dominating Europe’s gas supply, and beyond, to the Kremlin leader who wielded the “gas weapon” successfully against Ukraine and the EU in the early 2000s.”

The slide from the presentation at that time illustrates Gazprom’s ambitious goal of exporting nearly 450 billion cubic meters of gas annually by 2020.

This target was set despite the fact that in the mid-2000s, the export volume hovered around the 200 billion cubic meters mark, with approximately 50 billion cubic meters directed to Ukraine.

However, when examining the data for 2020, exports amounted to only 179.3 billion cubic meters, falling short by 2.5 times of the envisioned target.

So, how did Gazprom plan to bolster export volumes? Brace yourself! By supplying gas to North America – specifically to the USA and Canada! Behold another feat of Gazprom’s ingenuity.

Figures in the table reveal that in 2015, Gazprom aimed to export 61 billion cubic meters of gas to the North American continent, with 54 billion cubic meters earmarked for the USA. Naturally, it was assumed that the gas destined for America would be in liquefied form.

You might contend that the US exports gas itself. Why would they require gas from Russia?

That’s true, but the scenario was different in the early 2000s. The US was the largest gas importer, but the shale gas revolution had already commenced. And it happened right in the US!

Meanwhile, in Russia, which had successfully lured Europe into dependency on its gas by proposing and constructing gas pipelines through the Baltic and Black Seas, plans were already in motion to replicate this with America!

The shale gas revolution was entirely disregarded in Russia; Gazprom dismissed it as a “shale bubble” destined to burst, presuming that the US would naturally turn to Russia for gas assistance.

To be just, there were voices in Russia cautioning Gazprom and the Kremlin about the repercussions. However, they were few.

Here’s a forecast from Skolkovo analysts in 2012: “… as a result of a sharp increase in shale gas production (17 times compared to 2000), the US not only achieved independence from gas imports but also is ready to commence LNG exports to Europe and the Asia-Pacific region in the next 5 years.

“This implies that in the long run, Russia will encounter the emergence of a new competitor in its export markets.”

And indeed, this competitor arose.

On April 28, 2016, the first tanker with American LNG arrived in Europe, in Portugal, and from June 8, 2017, regular commercial deliveries from the US to the Netherlands and Poland began.

And in 2024, we already have the results for 2023 and an impressive picture.

The US set a record for natural gas exports in the form of LNG – 89 million tons or 124.5 billion cubic meters in regasified form.

Reminder – last year Russia exported over 90 billion cubic meters of gas.

The US surpassed Australia and even the traditional global leader in LNG exports – Qatar.

But it seems that in just over a year, Qatar will regain its leadership. In 2025, additional capacities for gas production and liquefaction will be put into operation, allowing it to supply up to 170 billion cubic meters per year.

And the second-largest gas exporter after the US for now is Norway, whose gas exports in 2023 amounted to 122 billion cubic meters, practically almost on par with the American ones.

And finally, a little something from the “prophecies” of the head of Gazprom in 2008: “Gazprom will become the world’s largest publicly traded company within 7-8 years, by which time Gazprom’s capitalization will reach $1 trillion against $365.1 billion in May 2008.”

For comparison: the current capitalization of Gazprom is about $42.6 billion (according to the Moscow Exchange).

Gas prices in Europe returned to market norms after the Germans outmaneuvered Gazprom by taking control of Gazprom Germania.

Miller’s reaction at the end of 2023: “For the first time in the history of global energy, there is an artificial destruction of gas demand,” meaning ungrateful Europe; we will turn to the East. But Putin’s great gas “pivot to the East” is being slowed down by Xi Jinping, who has not yet given final approval for “Power of Siberia-2”.

So, this is the stabilization that has occurred in the Russian gas industry.

But that’s not all. From the side of Naftogaz of Ukraine, Russia faces the forced seizure of assets worth over $5 billion for assets lost due to the Russian occupation in Crimea according to the decision of the Hague Arbitration, and in Zurich, another lawsuit from Naftogaz against Gazprom for non-compliance with the current 2019 agreement.

And this year, Gazprom faces arbitration processes from its European clients, somewhere around €15 billion for disrupted supplies due to the ruptured “Nord Stream.”

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Mykhailo Gonchar

Read also: Mykhailo Gonchar, President of the Centre for Global Studies Strategy XXI: “Russia: disarm, denuclearise!”

“Without fundamental changes to its cultural, political and administrative traditions, even after its defeat, Russia risks turning into a revanchist state that poses a threat to future generations.

“That is why Russia must be demilitarised, disarmed and prevented from starting a new war in Europe.

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