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Novatek to become the main supplier of Russian gas to Europe, beating Gazprom

23 July 2023

Increased supplies of liquefied natural gas (LNG) from Russia’s Novatek will help the group become Europe’s leading fuel supplier, overtaking state-owned Gazprom, Reuters calculations show.

Novatek’s evolution towards the first position shows how much the conflict in Ukraine has disrupted Russia and the world energy industry, as Europe has been supplied with LNG, abandoning Gazprom’s gas pipeline network, which dominated the supply of the continent for decades, according to Agerpres.

Unlike Russian oil, Russian gas is not subject to Western sanctions, although Brussels is considering extending the embargo on Russian fuels.

The EU has already taken measures to reduce its dependence on Russian supplies and wants to replace gas with renewable energy to reduce emissions. In the short term, the EU bloc increases LNG imports.

Novatek, founded almost 29 years ago, has the backing of the Russian state to expand into the LNG market, following the inauguration of the massive Yamal LNG plant in Siberia in 2017.

According to Reuters calculations based on data from Refinitiv Eikon, Gazprom’s total exports of LNG and pipeline gas to Europe stood at around 13.8 billion cubic meters (bcm) between January 1 and July 15. In the same period, Novatek’s exports to the region amounted to 12.34 bcm.

Representatives of Gazprom and Novatek did not respond to Reuters requests to comment on the information.

“Probably Gazprom has lost its record 65%-75% market share in Europe forever,” said Ronald Smith from the brokerage company BCS. However, he added, it will be “very difficult” for Novatek to completely replace Gazprom in Europe, due to the reduced LNG import infrastructure of Gazprom’s customers.

Gazprom’s gas exports, mainly to Europe, almost halved last year due to the political crisis after the invasion of Ukraine and the damage to the Nord Stream gas pipeline after the explosion in September.

Germany and Italy are among Gazprom’s biggest customers in Europe.

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