Russia's Ministry of Economy predicts that the country's natural gas production will reach 683 billion and 100 million cubic meters this year, which is a decrease of 5 billion and 300 million cubic meters compared to the previous estimate. This reduction is due to the prevailing economic and political conditions in the country and the impacts of military conflicts with Ukraine.
Reduction in Production and Export Forecast
Russia has reached this forecast while natural gas production in 2025 is expected to be 662 billion and 700 million cubic meters. This means that natural gas production this year will increase compared to next year, but it still faces a significant reduction compared to previous estimates.
In this context, Russian LNG exports are also forecasted to decrease from 30 million and 300 thousand tons in 2025 to 35 million tons this year. However, this figure is also 5 million and 300 thousand tons lower than previous forecasts, indicating the challenges present in global energy markets.
Economic Consequences and Impact on the Budget
Russia will use these forecasts to update its federal budget until 2029. This month, the Kremlin announced that Europe is harming itself by purchasing expensive gas from the spot market instead of opting for cheaper Russian sources. This issue could have profound effects on the European energy market and affect trade relations between Russia and European countries.
Moreover, Moscow has emphasized its readiness to resume gas supplies to Europe, including through the Nord Stream underwater pipelines. One branch of this pipeline remains intact after the explosions in September 2022, which could help improve trade relations between the two sides.
Recent calculations show that Russian gas exports to Europe fell by 44% last year to 18 billion cubic meters due to the blockage of transit routes through Ukraine, marking the lowest level since the mid-1970s. This decline in exports could negatively impact Russia's revenues and exacerbate the country's economic challenges.
