Novatek, Russia's largest independent gas producer, reported that its natural and associated gas production growth stalled in 2025, increasing by only 0.6% to 84.6 billion cubic metres. This ended a seven-year period of steady increases.

Factors Behind the Stalled Growth

The flattening of growth is attributed to a domestic supply glut and tightening international sanctions. The supply glut was triggered by the halt of Russian pipeline gas exports to Europe via Ukraine in 2024, which involved about 14 Bcm from Gazprom. Capacity constraints on alternative export routes to Turkey and China prevented the redistribution of this gas. Consequently, Novatek's combined sales of domestic pipeline gas and exports from its Yamal LNG project fell 1.5% to 76.6 Bcm in 2025, with the company holding 1.2 Bcm in undelivered gas at year's end.

Impact of Sanctions on Arctic LNG 2

Sanctions significantly impacted Novatek's Arctic LNG 2 project. Following U.S. sanctions in November 2023, Novatek abandoned plans for a third production train at the facility, which currently has two operational trains. The company has omitted project data from its reports, making a full assessment of the impact difficult. Data indicates that in 2025, 21 cargoes were shipped from Arctic LNG 2 to China, equivalent to about 1.3 Bcm, whereas in 2024, eight sanctioned cargoes were loaded but not delivered to customers, with some stored offshore in Russian waters.

Broader Context and Company Performance

Despite the challenges, Novatek's performance in 2025 was viewed as relatively better than most other Russian gas producers, with the country's total gas output estimated to have declined by 2-3%. The company's previous growth from 2019 was driven by investments in exploration and new assets to counter decline in core fields, but growth had already flattened between 2022 and 2024 due to sanctions. In contrast to gas, Novatek reported a strong year for liquids production in 2025, with output rising over 2% to about 294,000 barrels per day.