Russia's natural gas companies, Gazprom and Novatek, are taking steps to redirect exports eastward as tensions with the West simmer over the war in Ukraine.

The state-controlled gas giant Gazprom began construction on the Belogorsk-Khabarovsk pipeline, the first stage of a project to connect its eastern pipelines with western Siberian gas fields, traditionally used to supply Europe. 

The 800-kilometer pipeline, expected to be completed in 2029, aims to increase flexibility for deliveries to China as the company seeks to start Far Eastern gas deliveries to China in 2027. However, this hinges on resource readiness.

Launched in 2019, Power of Siberia delivered 22.7 billion cubic meters (bcm) to China last year and is on track to reach a full capacity of 38 bcm/yr next year. Further expansion hinges on additional pipeline infrastructure.

The Belogorsk-Khabarovsk project is the first step in Gazprom's long-term plan to shift its vast West Siberian resources eastward. The company prioritizes eastern pipeline construction despite lower piped exports, falling gas prices, and higher domestic taxes.

A crucial element of this strategy is the planned Power of Siberia 2 pipeline, stretching from West Siberia to Mongolia and connecting to the existing Power of Siberia line. 

While Gazprom seeks a firm 50 bcm/yr gas supply deal with China for the pipeline, negotiations are ongoing, and China seems to be in no rush to commit to the project.

Gazprom bases its eastward pivot on forecasts of a tripling Asian GDP and doubling gas consumption by 2050. The company also prioritizes domestic market development and LNG expansion.

Meanwhile, Novatek, Russia's leading private LNG producer, is constructing a 1,300-kilometer pipeline to supply its upcoming Murmansk LNG plant. 

This shift follows EU technology sanctions that complicated the construction of Novatek's Arctic LNG 2 project and associated ice-class tankers.

Novatek's Arctic projects face a deficit of ice-class tankers due to sanctions and limited shipbuilding capacity. Murmansk's ice-free port allows Novatek to utilize cheaper, conventional tankers. 

Additionally, Novatek seeks to leverage electricity from the Kola nuclear plant near Murmansk, avoiding reliance on sanctioned gas turbines for power generation.

The future of Novatek's Obsky LNG project on the Yamal Peninsula remains uncertain, with a final investment decision targeted for this year.