Russia is currently grappling with a significant surplus of natural gas, largely due to a sharp decline in exports to Europe. As one of the world’s largest holders of natural gas reserves, the country is exploring innovative ways to utilize this excess. Government officials and executives from relevant companies have indicated a particular interest in transforming this surplus into energy for data centers, particularly as demand for energy-intensive technologies, like artificial intelligence, continues to rise. Gazprom, Russia’s state-owned gas company, experienced export levels to Europe soaring to 175-180 billion cubic meters (bcm) in 2018-2019.
However, projections for 2024 indicate exports have plummeted to just 32 bcm, a fallout from the ongoing conflict in Ukraine and the recent suspension of gas transit through Ukrainian pipelines. The situation is expected to worsen, with estimates suggesting that export levels may be cut in half again this year. Amid this surplus, regions in northern Russia face challenges in managing the excess gas. Alexei Chekunkov, the minister for the development of the Far East and the Arctic, highlighted the urgent need to address this issue, as substantial daily volumes of gas that previously flowed westward are now left unutilized.
He discussed the potential for large investments in the gas chemical sector and noted the growing energy demands of data centers, which could leverage surplus gas for power generation. Despite these opportunities, challenges remain. Gazprom reported a production of 416.19 bcm last year, recovering from an all-time low but only managing to sell 361.7 bcm in the current year. Pavel Sorokin, Russia’s deputy energy minister, raised concerns about the cost-effectiveness of using natural gas for data centers.
He suggested coal production as an alternative, albeit with its own set of challenges due to international sanctions.