In the realm of geopolitics, numbers rarely carry poetry. But Russia’s gas export figures for 2025 aren’t just statistics—they read like an obituary. When Reuters, citing flows from the TurkStream pipeline, reported that Gazprom delivered only 14.7 billion cubic meters of gas to Europe in the first ten months of the year, it marked more than a record low. It signaled the end of an era. That volume is not just lower than last year—it dips beneath 1975 levels, when Europe imported 19.3 billion cubic meters from the USSR.
This isn’t just a market contraction—it’s a time warp. A regression to the pre-Brezhnev years, before the landmark “gas-for-pipes” deal laid the foundation for five decades of energy interdependence. That carefully constructed bridge between Moscow and Europe, which weathered Cold War standoffs, the Soviet invasion of Afghanistan, the fall of the Berlin Wall, and the collapse of the USSR, has now been dismantled—not by enemies abroad, but by a catastrophic miscalculation in the Kremlin.
In 2022, Russian leaders bet that Europe’s 40% reliance on Russian gas was an unbeatable trump card—that Berlin and Brussels would blink and abandon Ukraine to keep the lights on. They were dead wrong. Confronted with the brutal math of the “energy trilemma”—the balance between security of supply, sustainability, and affordability—European leaders chose to sacrifice affordability. They braved the sticker shock of 2022’s energy crisis in order to prioritize security at all costs.
The result? Russia torched its most powerful geopolitical asset. It gave up the richest, most stable energy market in the world—a market that once consumed up to 200 billion cubic meters of Russian gas annually.
But Gazprom’s implosion—from national champion to fiscal sinkhole bleeding trillions of rubles—is only the opening act. The real threat to the Russian state model came into sharp focus in 2025. We’re now witnessing a synchronized dual collapse.
While the gas sector flatlines, Russia’s true economic backbone—its oil industry—is under siege from two directions. First, the physical assault: since summer 2025, Ukraine has launched a relentless, technologically sophisticated drone campaign targeting Russian oil refineries, knocking critical capacity offline. Second, the financial squeeze: in October, the United States and its allies imposed direct blocking sanctions for the first time on two pillars of the Russian oil sector—Rosneft and Lukoil.
This twin collapse—self-inflicted gas destruction paired with coordinated oil strangulation—is not merely a sectoral crisis. It represents the systemic unmaking of Russia’s entire economic and foreign policy framework, which, since the late Soviet era, has revolved around fossil fuel exports as both a cash cow and a geopolitical weapon.
What follows is an anatomy of this double failure—a forensic look at how Moscow’s strategic “pivots” went sideways, and how the global energy architecture is shifting underfoot. As Russia fades from the stage, new, more reliable players—like the United States, Norway, and Azerbaijan—are stepping into the spotlight.
The Rise and Fall of Energy Interdependence: 1973–2025
To grasp the magnitude of the 2025 crash, it’s essential to understand the doctrine that defined Moscow’s relationship with Europe for half a century.
The Genesis (1970s–1980s): Economics as Ostpolitik
The roots of the Russian-European energy alliance trace back to the early 1970s, during a period of détente. The so-called “gas-for-pipe” deals emerged from pragmatic mutual interest that transcended Cold War ideology. For the Soviet Union, starved for hard currency to import food and technology, energy was one of its few globally competitive assets. Gas exports became a dependable source of petrodollars, funding both consumer imports and the arms race.
For Western Europe—especially West Germany—this was more than just commerce. It was the physical embodiment of Chancellor Willy Brandt’s Ostpolitik. Pipelines stretching from Western Siberia were seen as bridges to stability—literal and symbolic connections that eased East-West tensions through economic integration. This logic held firm for decades, surviving the Soviet invasion of Afghanistan, the deployment of U.S. Pershing missiles in Europe, and the Reagan administration’s prophetic warnings about energy dependence on Moscow. The model worked: the USSR got its cash, and Europe got cheap, reliable gas.
The Peak (2000s–2020s): From Partnership to Power Play
After the chaos of the 1990s, Vladimir Putin’s rise coincided with a global commodity boom. Soaring oil and gas prices flooded the Kremlin’s coffers. Around this time, Russia began to recast energy interdependence—not as mutual benefit, but as a tool of coercion.
The concept of Russia as an “energy superpower,” floated in the mid-2000s, became central to its foreign policy. Moscow convinced itself that Europe’s dependence on its gas was not mutual, but one-sided. The gas showdowns with Ukraine in 2006 and 2009, and the construction of Nord Stream and Nord Stream 2 pipelines that bypassed transit countries, were all designed to tighten Russia’s grip on Europe. What began as Ostpolitik had morphed into leverage.
The Fatal Misread (2022): A Broken Trilemma
That illusion shattered on February 24, 2022. Convinced that Europe couldn’t untangle its “energy trilemma” without Russian gas, the Kremlin launched its full-scale invasion of Ukraine. The calculus was brutal: faced with the prospect of a cold winter, industrial shutdowns, and social unrest, Europe would fold and leave Ukraine to its fate.
But the Kremlin got it catastrophically wrong. Russia underestimated two things: first, the existential shock Europe felt when its main energy supplier became a military aggressor at its borders; and second, the flexibility of the global LNG market and the resolve of U.S. leadership.
The EU responded by flipping the trilemma on its head. Supply security became the overriding priority—non-negotiable and priceless. By summer 2022, Europe was willing to pay any cost to break its dependency. As spot prices soared, Moscow slashed deliveries through Nord Stream and eventually shut them down entirely. But by then, the leverage was gone. Russia had cut off a market that no longer needed it.
The Final Curtain (January 1, 2025): Quiet Collapse
The symbolic end of this 50-year saga came on January 1, 2025. At exactly 8:00 a.m., the transit of Russian gas through Ukraine’s pipeline network stopped. The contract signed in 2019 expired—and no one bothered to renew it.
A decade ago, this would have triggered panic in European capitals. In 2025, it barely registered. The market response to losing 15 billion cubic meters a year was a brief and mild price uptick. Europe, hardened by the 2022 crisis, had learned to live without Russian gas. A historic chapter that began with Brezhnev ended not with a bang, but with a shrug.
Core Analysis: The Anatomy of a Dual Collapse
Russia’s energy crisis in 2025 is unfolding along two interlinked fault lines. First, there’s the financial implosion of its gas sector—an act of strategic self-destruction by Gazprom. Second, a coordinated assault—both physical and financial—on the country’s oil industry, long the budget’s cash cow.
Gas: A Black Hole and a Graveyard of Assets
Gazprom’s destruction of its European market has triggered three systemic consequences: the transformation of the company into a financial black hole, the collapse of trillion-ruble investments, and a structural inversion that now forces Russia’s oil sector to subsidize its gas operations.
The Unmaking of a Champion
For decades, Gazprom wasn’t just a company—it was a state within a state, the Kremlin’s top foreign policy tool and a pillar of the federal budget. At its peak, it contributed up to 25% of government revenues. That status is gone for good.
According to Russian accounting standards (which exclude oil, LNG, and power assets), Gazprom posted a staggering net loss of 1.076 trillion rubles in 2024—that’s nearly 3 billion rubles in daily losses. This follows a 629 billion ruble loss in 2023, proving the 2022 crash wasn’t a one-off shock, but a new normal. Deprived of its premium European market, Gazprom’s gas business is fundamentally in the red.
Stranded Assets in the Permafrost
But the financial bleeding only scratches the surface. Beneath lies a more existential blow: asset obsolescence. For decades, Gazprom poured tens of billions into developing massive gas fields on the Yamal Peninsula—most notably Bovanenkovo and Kharasavey. These fields, built in harsh Arctic conditions, were tailored for one customer (Europe) and one route (the Nord Stream pipelines).
After the sabotage of Nord Stream in 2022 and Europe’s political break with Russian gas, these trillion-ruble megaprojects have become stranded assets. Unlike oil, this gas can’t just be loaded onto tankers. And there’s no pipeline infrastructure to meaningfully redirect flows eastward. Gazprom’s theoretical export capacity of 500 billion cubic meters annually is now a mirage. Yamal’s gas remains locked underground—a fortune frozen in the tundra.
Structural Inversion: When Oil Carries Gas
Perhaps the most revealing insight from Gazprom’s 2024 financials is the company's internal cannibalization. While its standalone gas division hemorrhages money, the consolidated group (per international accounting standards) somehow posted a profit of 1.2 trillion rubles—about $15 billion.
The reason? The gas business no longer props up the group—the group props up the gas business. That paper profit came not from gas, but from side operations. First, via accounting maneuvers tied to the consolidation of Sakhalin Energy (formerly a Shell venture). But most importantly, from oil.
Gazprom Neft, the group’s oil arm, generated around 500 billion rubles in 2024. That profit is now being siphoned off to bankroll loss-making gas operations and plug massive holes in the company’s operating cash flow. Gazprom, once a gas giant dabbling in oil, is now effectively an oil company dragging a defunct gas business behind it. As a gas operation, it’s dead—kept alive only by financial transfusions from its oil division.
Strategic Pivots That Went Nowhere
With the West shut off, Moscow launched two so-called “strategic pivots” to save its gas volumes: the Power of Siberia 2 pipeline to China, and a Turkish gas hub aimed at southern Europe. By late 2025, both had failed—exposing a harsh new geopolitical truth: Russia’s “partners” are only willing to engage on terms that underscore Moscow’s diminished leverage and eroded agency.
The China Dead End: Beijing’s Price Dictates
Power of Siberia 2, a proposed 50 bcm/year pipeline meant to reroute Yamal gas to China, was billed as the answer to Europe’s exit. Talks dragged on for years, with Russian negotiators hoping for a post-2022 breakthrough.
Instead, they hit a wall. By late 2025, the deal had collapsed. The reason: Beijing’s unyielding stance. China knows it holds all the cards. Russia has no alternate buyer for its stranded Arctic gas. Meanwhile, China enjoys a diversified supply mix—LNG imports, Turkmen gas, domestic production, and surging renewables.
Beijing is in no rush. It’s already paying 37–40% less for gas from the original Power of Siberia route, with 2025 prices around $240 per thousand cubic meters, compared to $380 elsewhere. In talks for the new pipeline, China reportedly demanded prices close to Russia’s own subsidized domestic rates.
This isn’t partnership—it’s leverage. Even if a deal is eventually signed, Power of Siberia 2 won’t replace Europe in volume (50 bcm vs. the old 180+ bcm), let alone profitability. Russia, once an “energy superpower,” is now a raw-material appendage to China, forced to sell low just to sell at all.
The Turkish Mirage: Hub or Hype?
The second pivot, announced in October 2022, aimed to build a gas hub in Turkey to launder Russian gas for European resale. The EU promptly dismissed the plan, signaling that no amount of rebranding would revive demand for Russian gas.
By June 2025, Bloomberg reported that Gazprom had quietly shelved the project. Official reasons included infrastructure bottlenecks and lack of market interest.
But the real issue, as with China, was control. Turkey was willing to discuss the hub—but only if it retained authority over operations, pricing, and marketing. That would reduce Gazprom to a mere supplier, with no say in the business. Moscow, still clinging to illusions of geopolitical dominance, balked.
The collapse of the Turkish hub underscores a broader reality: Russia’s former “junior partners” are no longer willing to play by its rules. They’re engaging Moscow only from positions of strength—and on their terms.
Oil: The Opening of a Second Front
While Russia’s gas sector was largely the victim of its own decisions, its oil industry—the backbone of the federal budget and the primary funding source for its war effort—came under heavy, coordinated assault in 2025. That assault has played out along two axes: physical infrastructure destruction and financial export strangulation.
Drone War: Ukraine’s Strategic Strike Campaign
Since the summer of 2025, Ukraine has escalated the conflict with a new phase of high-tech warfare—systematic long-range drone strikes targeting Russian oil refineries. Unlike the sporadic, mostly symbolic attacks of 2024, the 2025 campaign is large-scale, precision-guided, and strategically focused. Its targets are the critical crude distillation units (CDUs), the backbone of Russia’s refining process.
By August, major facilities were successfully hit, including Rosneft’s Novokuibyshev refinery—where a strike disabled a CDU handling up to 80% of processing capacity—and the Ryazan refinery, where two key units were knocked offline. Industry analysts estimate that as much as 17% of Russia’s total refining capacity has been taken out. The consequences have been severe—both abroad and at home.
Global Fallout
The attacks forced a sharp cut in exports of refined petroleum products—diesel, gasoline, and jet fuel—which generate far more revenue than crude oil. According to Kpler, seaborne exports of Russian refined products dropped by 500,000 barrels per day in September 2025 from previous highs. Gasoline exports fell to zero for the first time on record.
Domestic Crisis
Inside Russia, the strikes triggered a fuel crisis. Retail gas prices soared to historic highs, fueling social unrest and public protests. The situation became so dire that the Kremlin imposed a total ban on gasoline exports to contain domestic shortages and prevent a political backlash.
The Sanctions Clampdown: Financial Pincers Tighten
Almost in parallel with the drone strikes, the West launched a second offensive—financial warfare. In October 2025, the U.S. and UK leveled full blocking sanctions (SDN designations) against Rosneft and Lukoil—the most aggressive move yet in the sanctions arsenal.
This marked a turning point. Until now, the West had avoided targeting Russia’s oil majors directly, wary of spooking global markets. But the new sanctions have created a legal minefield around any transaction involving those companies, raising the threat of secondary sanctions for buyers in India, China, and Turkey.
Europe, for its part, triggered a long-dormant bombshell of its own. Starting January 21, 2026, the EU will ban imports of refined products made from Russian crude—even if the refining happens in third countries like India or Turkey. This closes the main loophole Russia had used to launder its oil through global markets.
The result is a coordinated strategy of energy encirclement:
- Ukraine is physically dismantling Russia’s capacity to produce high-margin fuels.
- The West is financially and legally choking off Russia’s ability to sell both crude and refined products.
If Russia’s gas sector died by suicide, the oil sector is now being systematically executed.
A Global Reshuffle: The New Energy Order
Russia’s exit—voluntary and enforced—from premium energy markets hasn’t triggered a global supply crisis. On the contrary, it’s catalyzed a structural realignment of the global energy architecture, empowering new players and rewarding agile incumbents.
Paradoxically, one of the biggest beneficiaries of the refinery attacks has been the West’s own oil majors. The destruction of roughly 17% of Russia’s refining capacity created a global diesel and gasoline shortage, driving refining margins through the roof.
While Russia bleeds, ExxonMobil, Chevron, Shell, and TotalEnergies are raking in record profits. In Q3 2025, their combined refining income surged 61% year-on-year. ExxonMobil directly credited “supply disruptions” for its windfall—a thinly veiled reference to the chaos in Russia. Meanwhile, trading arms of Shell, BP, and TotalEnergies are cashing in on volatility, turning market instability into financial gold.
The New European Triad: Rebuilding Energy Security
What once hinged on Russian gas now rests on three pillars. Europe’s energy security, once a hostage to Moscow, has been reengineered into a more resilient, diversified model.
- The U.S. (LNG): The Atlantic Backbone
America has emerged as Europe’s energy guarantor. Seizing the moment, U.S. LNG producers ramped up exports dramatically. By 2024, the U.S. had cemented its status as the world’s top LNG exporter—with over 53% of its shipments (around 6.3 billion cubic feet per day) flowing to Europe, including Turkey. This lifeline helped Europe fill its storage and weather the brutal 2022–2023 energy crunch.
- Norway (Pipeline Gas): The Northern Anchor
Norway stepped in fast to replace Russian pipeline flows, becoming the continent’s dominant supplier. Oslo approved rapid production boosts and export expansions, stabilizing a continent in flux. Germany, once nearly captive to Gazprom, now sources more than 60% of its imported gas from Norway.
- Qatar (LNG): The Long-Term Player
Qatar, the world’s second-largest LNG producer, unveiled a massive expansion plan in 2024—targeting 142 million metric tons per year by 2030. Its strategy? Snap up market share vacated by Russia and become Europe’s indispensable LNG partner. With long-term contracts and deep reserves, Doha is positioning itself as a stable, strategic pillar of the continent’s future energy mix.
Azerbaijan and the Southern Gas Corridor: From Peripheral Route to Central Artery
The Southern Gas Corridor (SGC), once billed as a supplementary route, has morphed into a cornerstone of Europe’s energy sovereignty. In Brussels, SGC is now openly referred to as a “geopolitical project” and a “critical pillar” of the EU’s diversification strategy.
In July 2022, amid the height of Europe’s gas panic, European Commission President Ursula von der Leyen and Azerbaijani President Ilham Aliyev signed a strategic memorandum pledging to double SGC capacity and boost Azerbaijani gas deliveries to 20 bcm per year by 2027.
The shift is already visible. In 2024, Azerbaijan supplied Europe with roughly 13 bcm of gas—up 57% from 2021. But the real value isn’t just in the numbers. In a world where Russia weaponized energy, Azerbaijan is offering what Europe now prizes above all: predictability. Baku has become a symbol of reliability, contractual discipline, and a depoliticized energy partnership.
The SGC is no longer just an eastern detour—it’s the spine of Europe’s energy independence, a corridor of stability stretching from the Caspian to the Adriatic.
Europe’s Energy Rebalancing: A New Map Emerges (2021–2025)
In just four years, Europe’s energy landscape has been radically transformed. In 2021, Russia supplied around 155 billion cubic meters of pipeline gas—nearly 40% of European imports. By 2025, that figure has plunged to just 18 billion cubic meters, less than 5% of the market. Even Russian LNG—once a relatively immune stream—is now under threat, facing sanctions and market erosion.
Norway has surged to the top, boosting exports to 120 billion cubic meters and capturing 35% of the market. The U.S. has tripled its LNG deliveries to 75 billion cubic meters, now accounting for 22%. Azerbaijan, leveraging the Southern Gas Corridor, has raised exports from 8 to 13 billion cubic meters and is on track to double that figure. Algeria, Qatar, and others contribute over 100 billion cubic meters combined—roughly 30% of the market.
Meanwhile, the EU’s total gas imports have fallen from 395 to 341 billion cubic meters—driven by systemic reforms, accelerated adoption of renewables, energy efficiency initiatives, and a sharp reduction in industrial demand. Europe hasn’t just swapped suppliers—it has reengineered the very foundation of its energy independence.
Policy Recommendations: Locking in the Shift
The new energy order demands a strategic realignment from all major players. The goal: consolidate gains in curbing Russian leverage, fortify European resilience, and capitalize on new market dynamics.
For EU and U.S. Policymakers:
- Shift Strategic Focus
The era of Russian gas blackmail is over. Moscow’s pipeline leverage no longer constitutes a systemic threat. The Kremlin’s new vulnerability lies squarely in its oil sector—the financial engine of its war machine. Sanctions strategy must shift accordingly. - Tighten the Oil Clamp
- Financial Front: Enforce full compliance with SDN sanctions against Rosneft and Lukoil. Apply secondary sanctions to financial institutions in third countries that facilitate their operations. Crack down on the shadow fleet and the insurers enabling embargo evasion.
- Regulatory Front: Don’t wait for the EU’s January 2026 deadline. Fast-track the ban on imports of refined fuels made from Russian crude in third countries. Closing this loophole could deliver a decisive blow to Russia’s oil revenues.
- Cement Diversification
Build durable mechanisms to support new suppliers through institutions like the European Investment Bank and EBRD. Prioritize the rapid expansion of the Southern Gas Corridor and LNG infrastructure across Europe. The aim: make the new supply map permanent and inoculate the continent against future energy coercion.
For Regional Players (Including Azerbaijan):
- Seize the Strategic Window
The current geopolitical moment is unique. The next 3–5 years will be decisive in locking down long-term market share. Azerbaijan should fast-track contracts with key European buyers—Bulgaria, Romania, Hungary, Italy—to secure financing and scale up the Southern Gas Corridor to 20 bcm/year by 2027.
- Solidify the Reliability Brand
Brussels already sees Baku as an “anchor of stability.” To cement this image, Azerbaijan must maintain flawless contract performance, respond swiftly to market shifts, and remain transparent about production and infrastructure plans. In 2025, predictability is as valuable as product.
- Broaden the Energy Partnership
Use gas as a gateway to deeper collaboration in green energy. Projects like the undersea “green cable” across the Black Sea can position Azerbaijan as a long-term strategic energy partner—even in a decarbonizing world.
Post-Energy Russia: The End of a Paradigm
By 2025, Russia’s historic energy cycle—once the bedrock of its economy and foreign policy—has run its course. Fossil fuel exports, which once funded half the federal budget and served as levers of geopolitical influence, no longer offer either power or protection. The rentier model is broken. What’s left is a country facing economic contraction, technological isolation, and structural decline.
The global energy market has moved on. Europe diversified. The U.S. and Norway strengthened their footholds. Azerbaijan stepped into a central role.
This marks a hard geopolitical fact: Russia is no longer a dominant force in global energy. Its role has been downgraded—from price-setting powerhouse to peripheral supplier, increasingly dependent on decisions made in Beijing, Ankara, and New Delhi. This isn’t a temporary downturn—it’s the collapse of a 50-year paradigm that once defined the Russian state.