In the wake of Western sanctions imposed on Russia after its invasion of Ukraine, many predicted a sharp decline in Russia’s energy exports and a corresponding economic collapse. Yet, the reality has unfolded quite differently. While Europe struggles with energy costs and economic slowdowns, Russia has managed to set new records for gas exports to China and continues to profit from strategic energy maneuvers. Adding another layer of complexity, former U.S. President Donald Trump is poised to play a significant role in reshaping global energy dynamics.
Russia’s Pivot to China: Breaking Records
Russia’s Power of Siberia gas pipeline to China has become a lifeline for Gazprom, the state-owned energy giant. On December 20, Gazprom reported a new daily record in natural gas deliveries to China, exceeding its contractual obligations. While exact figures remain undisclosed, Gazprom’s consistent ability to surpass its targets shows the pipeline’s growing importance.
Gazprom announced that daily flows through the “Power of Siberia” pipeline exceeded Russia’s maximum contractual commitments, though exact figures were not disclosed. The outlet noted that starting December 1, Gazprom increased supplies to the equivalent of 38 billion cubic meters per year, matching the design capacity of the Power of Siberia pipeline. Given this, Bloomberg speculates that China may become Russia’s largest market for pipeline gas this year, as Gazprom grows increasingly dependent on China as a buyer after most of its European customers rejected Russian supplies following the invasion of Ukraine.
China’s hunger for energy aligns perfectly with Russia’s need for a reliable export market. After European nations curtailed their reliance on Russian energy, China emerged as Moscow’s largest buyer of pipeline gas. With the pipeline’s annual capacity set to reach 38 billion cubic meters by 2025, Russia’s dependence on China is solidifying.
Yet this pivot comes with risks. While China benefits from favorable pricing and reliable supplies, Russia faces the challenge of being overly dependent on a single market. Nevertheless, Russia’s strategy has worked so far, keeping its energy revenues flowing despite sanctions.
Sanctions and Europe’s Struggle
For Europe, cutting ties with Russian gas has been both a moral and economic challenge. Prior to 2022, Russian gas flowed abundantly through pipelines like Nord Stream and via Ukrainian transit routes. But as sanctions intensified, Europe turned to alternatives like liquefied natural gas (LNG) from the United States and pipeline gas from Norway.
Despite these efforts, European industries remain burdened by higher energy costs. Countries like Germany and the Czech Republic have invested heavily in LNG infrastructure, but landlocked nations such as Slovakia and Austria remain heavily reliant on Russian imports. These vulnerabilities have caused divisions within the EU, with some nations advocating for continued limited imports from Russia while others push for complete energy independence.
At the same time, Russia has found ways to bypass sanctions by increasing LNG exports to Europe. In 2024, Russian LNG imports to the EU hit record highs, underscoring the bloc’s ongoing dependence on Moscow’s energy supplies. According to Bloomberg, “France has already hit its highest-ever volumes and Spain is closing in on records seen last year.”
While some countries like Hungary have doubled down on their reliance on Russian supplies, others have pursued aggressive diversification strategies. Olga Khakova, deputy director for European energy security at the Atlantic Council, highlighted the efforts of countries like Germany and the Czech Republic: “A lot of landlocked countries, like the Czech Republic, have gone out of their way to look at alternative supplies and invested in alternative options.”
However, even with these efforts, Europe faces limitations. Christoph Halser, Rystad’s gas and LNG analyst, pointed out, “There is no political consensus in Germany for taking Russian gas in the near future.”
How Russia Benefits from Its Strategy
Russia’s resilience lies in its ability to diversify its energy export markets and exploit geopolitical opportunities. By strengthening ties with China and maintaining partial access to the European market through LNG shipments, Russia has cushioned the economic blow of sanctions.
Moreover, Russia’s dominance in the LNG market offers another revenue stream. European nations, unable to fully decouple from Russian LNG due to logistical and infrastructural constraints, continue to provide Moscow with significant revenues.
Gazprom’s supplies to Europe fell 55.6% to 28.3 bcm in 2023, compared with peak levels of 175-180 bcm in 2018-19. However, Moscow has been working diligently to build the proposed Power of Siberia-2 pipeline, which could carry 50 bcm of natural gas annually from Russia’s northern Yamal region to China via Mongolia.
Trump’s Role in Energy Geopolitics
Donald Trump’s return to the political stage brings another layer of complexity to global energy markets. Known for his transactional approach to international relations, Trump has already threatened tariffs on European imports unless the EU significantly increases purchases of American oil and LNG.
In a Truth Social post, Trump wrote, “I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!”
During his previous term, Trump pushed for greater American energy dominance, advocating for LNG exports to Europe. With U.S. LNG already accounting for nearly half of Europe’s imports, Trump’s proposed policies could further cement America’s role as a key supplier.
However, Trump’s unpredictability poses risks. His threats to reduce aid to Ukraine and his wavering support for NATO could undermine Western unity in energy policy. At the same time, his demands for Europe to prioritize American LNG over Russian supplies could exacerbate existing tensions within the EU.
According to William Reinsch, a trade expert at the Center for Strategic and International Studies, Trump’s energy stance could become a “win-win,” saying, “This could be a win-win, telling them to buy something they want and need anyway.”
Impact Global Energy Flows
As Russia deepens its ties with China and maintains strategic footholds in Europe, and as Trump pushes for an energy trade imbalance favoring the U.S., global energy flows are shifting in unprecedented ways. Europe faces a balancing act: securing affordable energy while reducing dependence on both Russian and American suppliers.
For Russia, the strategy of diversifying its energy partners is paying off, but long-term sustainability remains uncertain. For Europe, the path forward will require continued investment in LNG infrastructure, renewable energy, and geopolitical resilience.
ACZ Editor: Russia’s shift to China is worrisome but not surprising. The worrisome part is that energy flows dictate strength and prosperity, which may quickly turn away from Europe and toward Asia. Many have speculated that Russia’s goal is to cut off Europe entirely. But this certainly puts Russia in a position of strength.
