Russian gas producer reveals dramatic fall in supplies to EU

Russian gas supplies to the EU dropped by almost 50% since May, while exports to Japan and South Korea remained at about the same level as in 2021, the CEO of Novatek, Russia’s second largest gas producer, revealed on Thursday.

“Russian supplies to Europe decreased by nearly 50 billion cubic meters of gas (bcm) in the past four-five months. As of October 1, the slump has reached 47%,” CEO Leonid Mikhelson said at the Eurasian Economic Forum in Baku, adding that the EU has almost replenished the shortfall by boosting LNG consumption by 65%.

According to his estimates, the EU has received a total of 43bcm in additional volumes of gas via its LNG terminals, with 29bcm arriving from the US.

Mikhelson suggested that the upcoming winter will be the easiest of the next three, given that the bloc has managed to build up its gas stocks. However, he warned that with restored demand in China, the global economy may need about 60-70 million tons of LNG in the next two years to offset reduced pipeline gas supplies. Mikhelson also pointed to the lack of new major projects until 2026.

In his view, global GDP will struggle to grow amid skyrocketing energy prices, and the only way to rein in the inflation and stabilize the markets is to beef up investment in new large-scale energy projects. And this, according to Mikhelson, is only possible with international cooperation.

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