Russia’s long-standing dominance as Europe’s primary gas supplier is undergoing a seismic shift. Facing sanctions and a waning European market, the Kremlin is pivoting eastwards to meet Asia’s burgeoning energy demand.
This strategic reorientation has the potential to reshape global energy dynamics, with far-reaching implications for pricing, security, and sustainability, according to newly released research published in Nature Communications.
Historically, Europe relied heavily on Russian gas to fuel its industries and households. At its peak, Russia supplied more than 40% of Europe’s natural gas. However, geopolitical tensions following the Ukraine conflict and the imposition of Western sanctions have forced Moscow to diversify its customer base. The “Power of Siberia” pipeline, inaugurated in 2019, symbolises this pivot. Running over 2,000 kilometers, it delivers gas from Siberian fields to China and serves as a linchpin for Russia’s Asian ambitions.
“We find that even under a pivot to Asia strategy, Russia struggles to regain pre-crisis gas export levels in all scenarios,” the authors write. “Compared to 2020, Russia’s gas exports are down by 13–38% in 2040, and by 31–47% where new markets to Asia are limited.”
China, the world’s largest energy consumer, has embraced the partnership. In 2022, Russian pipeline gas exports to China surged by 50%, and further increases are expected as new deals are struck. Other Asian economies, including India and South Korea, are also positioning themselves to tap into Russian gas supplies.
The 3,000 km-long Power of Siberia gas pipeline is meant to connect the Yakutia and Irkutsk production centres to supply the Russian Far-East and Chinese regions. ©Enerdata
The research suggests that this shift will have profound implications for global supply dynamics. By redirecting its exports to Asia, Russia could tighten supply in Europe, leading to heightened competition for liquefied natural gas (LNG) from alternative suppliers like the US and Qatar.
This was reaffirmed by analysis published by Montel Analytics, which forecasts that the global market price for LNG will determine the trade price for natural gas.
“US LNG is expected to become the most important import source for Europe, and it is therefore assumed that it will set the price,” it notes. “However, natural fossil gas will lose significance in the market in the long term, as it is increasingly replaced by synthetic fuels and renewable hydrogen.”
European nations have already begun adapting, with countries such as Germany ramping up LNG terminal construction and accelerating renewable energy projects.
“Europe is increasingly dependent on LNG imports so is exposed to the liquidity and volatility of the global LNG market,” the study notes. “EU policies to accelerate gas demand reduction could reduce this dependence.”
According to World Bank forecasts, European gas prices are anticipated to increase by 7% this year, before declining by 9% in 2026 amid stagnant demand.
Meanwhile, Asia’s growing appetite for energy is reshaping the global market. With industrial expansion and urbanisation driving consumption, countries in the region are seeking stable, long-term energy partnerships. China’s Belt and Road Initiative further underscores its ambition to dominate the global energy trade. Enhanced infrastructure, including new LNG import terminals, is cementing Asia’s role as a critical player in the global gas market.
Security and sustainability
Yet, this shift raises critical questions about energy security and pricing. Long-term contracts tied to fixed pricing could shield Asian buyers from market volatility, but they might also exacerbate tensions in spot markets. For Europe, reduced access to Russian gas complicates its energy security calculus, particularly during peak winter demand periods. Countries dependent on Russian gas face stark choices: invest heavily in renewables or risk economic slowdown.
Environmental concerns also loom large. Natural gas, while cleaner than coal, is still a fossil fuel with significant carbon emissions. “The expansion of natural gas infrastructure puts energy transitions at risk,” the authors caution, “as it locks economies into emissions-intensive pathways.”
For Russia, the economic stakes are high. Gas exports account for a substantial portion of its revenue, and a successful pivot to Asia could stabilise its economy amid Western sanctions. However, building the necessary infrastructure is capital-intensive and fraught with geopolitical risks. Questions remain over whether Russia can sustain its ambitious export targets while navigating a complex global landscape.
Europe, too, must grapple with the long-term effects of reduced Russian gas imports. The accelerated shift to renewables could bolster its climate commitments but will require major investment and innovation. For now, the region’s focus is on managing immediate supply gaps and ensuring energy affordability.
As Russia’s gas pivot unfolds, the global energy landscape faces a period of profound transformation. The balance of power is shifting, and the implications will resonate far beyond Europe and Asia. Policymakers, industry leaders and environmental advocates must navigate these changes with an eye towards sustainability and security.
“The use of geopolitical frames to drive model-based scenarios illustrates the complex interrelationships between climate action and energy security,” the authors conclude. “In all scenarios, Russia has reduced exports and the Russian Government has reduced revenues.”
