Russia's biggest energy company says it'll take it at least 10 years to recover gas sales lost because of the Ukraine war

• Russia's gas giant Gazprom won't recover gas sales lost to the Ukraine war for at least a decade.
• A study seen by the Financial Times says pre-war export volumes will return by 2035.

Gazprom, Russia's state-owned energy giant, likely won't recoup pre-war gas sales for a decade, research commissioned by the company said.

"The main consequences of sanctions for Gazprom and the energy industry are the contraction of export volumes, which will be restored to their 2020 level no earlier than in 2035," the study said, seen by the Financial Times.

By that year, gas exports to Europe will barely average a third of the volumes sold before 2022, when Moscow invaded Ukraine. Although Europe has long been the primary hub for Russia's gas, the war triggered a wave of retaliatory sanctions, upending trade with the West.

Gazprom was among the suppliers hit hardest by the measures. In early May, the firm disclosed a net loss of $6.9 billion in 2023, marking its first annual decline in over two decades.

The future doesn't look much brighter.

The study predicts that Gazprom's role in Russia's energy sector is fleeting, as the firm's dependence on pipelines will lose ground against liquified natural gas exports. What's more, the company will need considerable state funding to scout out alternative markets for its product.

Hope lies in the development of the Siberia-2 pipeline, a major proposal to connect Russia with China's market.

So far, the pipeline deal is stalled over disagreements about pricing and supply, but even if the project does come online, the added exports won't make up for lost European revenue, as Beijing has been buying Russian gas at a deep discount.

The buildout of pipelines pits Gazprom against another issue: sanctions have cut Russia off from necessary supplies to develop the infrastructure.

The report noted that Gazprom will struggle to increase export capacity if it has no access to western-made turbines, which are necessary to move gas through pipelines.

Developing turbines domestically will take five years and 100 billion rubles, a big undertaking for a firm that's already struggling financially.

Instead, the best solution would be to embrace LNG, diversifying away from pipeline exports and finding buyers beyond China, the study said. That's no easy transition for Gazprom either, as it has no technology to produce LNG at larger capacity.