Russia delays plans to become an LNG powerhouse. Expansion of LNG exports runs into sanctions

Russia has long had strong ambitions to strengthen its position in the global liquefied natural gas (LNG) market. The country originally planned to increase its exports severalfold over the next decade and capture roughly a fifth of the market. However, Russian Deputy Prime Minister Alexander Novak announced last week that these plans are being postponed “by several years”. The reason is Western sanctions.

For decades, Russia was one of the biggest players in the natural gas market, thanks to its exports to the EU and other countries. However, after the outbreak of the war in Ukraine, Russian pipeline gas exports fell significantly, and since the beginning of this year Europe has been supplied only via the TurkStream pipeline. Russia has managed to increase its natural gas exports to China via the Power of Siberia pipeline in recent years, but these volumes are nowhere near enough to make up for the lost revenue caused by the drop in gas supplies to Europe.

The country nevertheless has major ambitions for liquefied natural gas exports, planning to triple its export capacity. Under the original plans, this was to reach around 100 million tonnes of LNG over the next 10 years. This would give Russia, according to Reuters, roughly a 20% share of the global market, compared with around 8% at present. However, these plans are running into Western sanctions, which are also targeting the LNG sector.

"Our target was to reach 100 million tonnes. It is clear that, because of the restrictions associated with sanctions, this target will be postponed by several years," Novak told Russian state television, without providing further details.

Russia increased its liquefied gas exports by more than 5% in 2024, to 34.7 million tonnes, slightly below earlier expectations. The situation surrounding the new Arctic LNG 2 terminal is particularly problematic for Russia, as it is subject to Western sanctions. The new terminal was supposed to reach an export capacity of nearly 20 million tonnes, but so far it has exported only a handful of cargoes. The Murmansk LNG project, with a similar export capacity, is also facing delays.