New Reality for Gazprom: The End of a 60-Year Partnership with the EU

A New Reality for Gazprom: The End of 60 Years of Cooperation with Europe

The European gas market, which has been a stable source of income for Gazprom ($GAZP) for decades, has radically transformed. Nearly six decades of partnership between the Russian gas giant and the European Union is coming to an end, and now the company is faced with the necessity to adapt to new geopolitical and economic realities.

Export Declines: Numbers that Speak for Themselves

From 2021 to 2025, pipeline gas exports to the EU are expected to drop nine-fold. This historic low is attributed to several key factors:

• Termination of transit through Ukraine: Political and geopolitical tensions have led to halting the traditional supply route.
• Decreased gas consumption in the EU: The shift toward "green energy" has become a priority for many countries in the bloc.
• Increase in U.S. LNG: The U.S. has actively taken Russia's place by providing alternative sources of gas to European countries.

In 2024, the EU continued to purchase Russian LNG at a volume of 21 billion cubic meters; however, these supplies are under significant risk due to potential new sanctions. Among the few remaining partners of Gazprom in Europe, Hungary remains significant.

The Role of the U.S.: Strategic Dominance in the Gas Market

The U.S. decision to push Russia out of the European gas market began to be realized during Donald Trump's first presidential term. Since then, the influence of American LNG has steadily grown.

• The Biden administration continued the course of expanding LNG exports, allowing the U.S. to become the leading gas supplier to the EU.
• Trump and a potential second term: Considering the current political rhetoric, even greater pressure on Russian gas exports can be expected should Trump return to power.

These actions have changed the structure of the gas market, with American LNG taking a leading position, thereby ensuring energy security for Europe.

How Gazprom is Responding: Challenges and New Directions

For Gazprom, an era of significant change has arrived. The company faces numerous challenges but is also presented with new opportunities:

1. Loss of revenues from the EU: The reduction in gas supplies to Europe places pressure on revenue, reflecting in the company's stock quotes.
2. Reorientation towards Asia: China and other Asian countries are becoming key markets for Gazprom. Increasing exports through the "Power of Siberia" plays a strategic role.
3. Investments in LNG: Developing LNG infrastructure is becoming essential for competition on a global scale. Russian LNG may become a primary source of revenue in the future.

What Investors and Traders Should Pay Attention To

• Stock Quotes: The potential decline in Gazprom's ($GAZP) stock quotes due to reduced European supplies makes investments riskier.
• Asian Market: Gazprom's success in diversifying supplies and increasing export capacities to the East will be a determining factor for future revenues.
• Sanctions and Regulatory Restrictions: New restrictions may further limit the company's opportunities on the international stage.
• LNG Infrastructure: The development of this sector will determine the company's competitiveness in the coming years.

Gazprom finds itself in a situation where it must completely rethink its business strategy. The exit from the European pipeline gas market, driven by political and economic reasons, has left a deep mark but has simultaneously opened new avenues for development. For investors and traders, it is crucial to closely monitor the company's actions in Asian markets, its plans in the LNG sector, and the potential impact of new sanctions. This new reality will dictate Gazprom's position on the international stage, at least for the next four years.