• Russia's Deputy Prime Minister Alexander Novak says the country can reroute and sell all its gas if Europe rejects it, but infrastructure and commercial hurdles remain.
  • Gazprom (GAZP.ME)'s European pipeline exports fell 44% in 2025, and the EU's phase-out of Russian gas is set to accelerate.
  • Proposed Power of Baikal pipeline to China is still under negotiation, with pricing and volume flexibility sticking points.

Russia is seeking alternative buyers for its natural gas as Europe phases out imports, but Deputy Prime Minister Alexander Novak's assertion that the country can reroute and sell everything is an assertion, not evidence that replacement infrastructure, customers and commercially equivalent contracts are already secured. LNG can change destinations more readily than pipeline gas; the major proposed new pipeline to China still had commercial terms under negotiation on October 21.

A Pivot to Asia, But Not Yet a Solution

On October 21, Novak said Gazprom and China's CNPC could reach commercial agreements by year-end for the Power of Baikal pipeline, formerly known as Power of Siberia 2. The proposed route through Mongolia would carry up to 50 billion cubic metres annually from western Siberian fields that previously supplied Europe. Pricing and volume flexibility remained negotiating obstacles, according to people familiar with the matter.

Simultaneously, Russia kept the door open to Europe. Novak said the surviving Nord Stream line could technically supply gas if European governments agreed. Novatek (NVTK.ME) chief Leonid Mikhelson urged the EU to reconsider its LNG ban, while separately saying his company would redirect LNG worldwide. These are negotiating positions and intentions—not confirmed restored flows or fully contracted replacement sales.

On October 27, EU Energy Commissioner Dan Jørgensen was reported as saying the EU would not lift its Russian-gas ban even following a Ukraine peace agreement. That reinforces the distinction between Moscow's willingness to supply and Europe's willingness—and legal ability—to buy.

The key distinction is between changing a cargo's destination and replacing a pipeline market. For LNG, particularly Novatek's Arctic exports, rerouting involves sending shipborne cargoes to buyers outside Europe, but specialized vessels, Arctic shipping and transshipment capacity, sanctions exposure, and longer voyages complicate diversion. Existing pipeline exports to China can increase through established routes, but Gazprom already delivered 38.8 billion cubic metres through Power of Siberia in 2025; growth there does not itself demonstrate that Europe-bound western Siberian gas has an immediate alternative outlet. The proposed Power of Baikal pipeline remains a future project; an agreement on commercial terms is not an operating pipeline.

Consequently, selling displaced volumes eventually and preserving their former European profitability are separate questions. Even successful LNG diversion may involve higher logistics costs, while pipeline diversification requires substantial new infrastructure and negotiated purchasing commitments.

Financial Strains Show the Challenge

Gazprom, Russia's largest natural-gas producer and sole pipeline-gas exporter, is central to the Europe-to-China export shift. In 2025, revenue fell 8.8% to RUB 9.77 trillion, while net income rose 7% to RUB 1.3 trillion, helped by currency effects on foreign-currency debt. European pipeline exports fell 44%. In June, Gazprom forecast 2026 EBITDA growth of 6–7%, supported by domestic sales and China.

Novatek, Russia's largest LNG producer with major Arctic operations including the Yamal LNG project, saw first-half 2026 hydrocarbon output average 1.91 million barrels of oil equivalent daily. First-half 2026 revenue rose 4% to RUB 836.3 billion; reported net profit fell about 3% to RUB 218.7 billion. Normalized EBITDA, including its share of joint ventures, fell 8.8% to RUB 430.4 billion, and operating cash flow declined 12%.

The cited recent reporting does not establish a significant leadership change or new formal corporate restructuring tied to this headline. The consequential change is strategic: shifting export markets, logistics and infrastructure toward non-European customers.

Europe's Phase-Out Is Law

The EU's phase-out is enacted law, not merely a proposal. Its principal deadlines are:

  • April 25, 2026: restrictions on qualifying short-term Russian LNG contracts.
  • June 17, 2026: restrictions on qualifying short-term pipeline contracts.
  • January 1, 2027: prohibition covering long-term Russian LNG contracts.
  • September 30, 2027: prohibition covering long-term pipeline contracts, potentially extended to November 1 if the Commission identifies a storage-filling risk.

The rules cover gas originating in or exported directly or indirectly from Russia, backed by authorization and origin-information requirements. Routing Russian gas through an intermediary therefore does not automatically make it eligible for EU import.

The IEA estimates that the EU phase-out will remove approximately 33 billion cubic metres a year of Russian pipeline and LNG deliveries between 2025 and 2028. It recommends diversified contracts, stronger cross-border infrastructure and more flexible procurement, particularly in Central and Eastern Europe.

The trade-off is less dependence on Russia but greater exposure to global LNG conditions. Russian officials have emphasized Europe's low storage and higher prices; those statements come from interested suppliers. Separately, market analysis anticipates additional LNG capacity—especially from the United States—could ease conditions from 2027, although geopolitical risks remain.

Political and Societal Fallout

The effects differ by stakeholder. European households and gas-intensive businesses face transition-related price and supply risks, especially during cold weather or tight LNG markets. Hungary and Slovakia are especially exposed to the remaining pipeline-gas transition and have opposed aspects of the phase-out, seeking greater flexibility.

Russian producers, investors and public finances face the question of whether new sales can preserve export earnings rather than merely maintain production volumes. The companies' recent revenue and earnings figures show why that distinction matters.

Internationally, this accelerates Russia's commercial pivot toward China and creates opportunities for alternative suppliers. However, a US–Russia political agreement would not automatically remove EU import restrictions, sanctions on Nord Stream infrastructure, or certification requirements. Columbia University's Center on Global Energy Policy identifies these as substantial obstacles to restoring large Russian flows.

What to Watch

The immediate test is the January 1, 2027 ban on long-term LNG contracts. Actual cargo destinations, shipping availability and realized sales economics will be more informative than declarations that all gas will find buyers. Europe's storage position, winter demand and replacement LNG availability will determine how disruptive the transition becomes.

In the longer term, Power of Baikal could provide a substantial alternative market for western Siberian gas. Novak's year-end agreement target is nevertheless an official expectation, not a completed commercial deal or commissioning schedule. China's purchasing terms, infrastructure construction and contract flexibility remain central to the outcome.

Also worth watching: Novatek's simultaneous campaign for an EU reconsideration and preparations for worldwide diversion—evidence that retaining Europe remains commercially attractive even while Russia promotes alternatives. And the debate over restoring Nord Stream: technical repairability does not resolve sanctions, certification or political opposition.

Correction: An earlier version of this article misstated the year of Gazprom's forecast for EBITDA growth. It was June 2026, not June 2025.