Gazprom, the Russian state-controlled gas giant, has approved a significant reduction in its annual investment spending for 2026, cutting it by 31% to approximately 1.1 trillion roubles ($13.9 billion) from 1.6 trillion roubles in 2025. Despite this substantial budget decrease, the company has committed to continuing all its key strategic projects.

Strategic Focus on Asian Gas Exports

The company is prioritizing gas export projects aimed at markets like China, a strategic shift necessitated by international sanctions that have barred access to traditional markets such as the European Union. The EU plans to outlaw all Russian gas imports by the end of 2027. A central project is the new Sila Sibiri 3 pipeline in Russia's Far East, set to begin supplying 10 billion cubic metres of gas annually to northeast China starting in 2027.

To fulfill these commitments, Gazprom is accelerating the construction of the 800-kilometre Belogorsk–Khabarovsk pipeline, which is 64% complete. This pipeline will connect the Kovykta and Chayanda gas fields to the Sila Sibiri 3 pipeline. Originally, the Sakhalin 3 offshore block was planned to feed Sila Sibiri 3, but U.S. sanctions have delayed that project. Gazprom is also working to add gas reserves in East Siberia to support increased deliveries via the existing Sila Sibiri 1 pipeline, with planned 2025 deliveries of 38.8 Bcm exceeding the contract ceiling.

LNG Projects and Sanction Challenges

On the liquefied natural gas (LNG) front, the Baltic LNG project near Ust-Luga is reported to be 70% complete. The project, scheduled for start-up in 2028, will feature two trains with a combined annual capacity of over 13 million tonnes, fed from Gazprom's trunkline network. However, its development is being hampered by U.S. sanctions, which have already severely impacted another major Russian LNG project, Novatek's Arctic LNG 2. That project managed minimal shipments in 2024 due to sanctions and logistical issues caused by early Arctic ice.

An industry specialist notes that sanctions will have an even greater impact on Baltic LNG, as its production start will coincide with the European market closing to Russian LNG and pipeline gas, depriving it of its most lucrative market.

Emphasis on the Domestic Market

Faced with these export market challenges, Gazprom identifies the Russian domestic market as key to its future, expecting it to drive an 8% revenue growth in 2026. The Russian government has approved significant domestic gas price increases—over 10% from July of this year and a planned 9.6% hike from October 2026—which will support this revenue growth.