Russia "28% Decline in Natural Gas Exports"... On Alert for Possible OPEC+ Production Increase

Gas Price Surge Doubles Russia's Export Revenue
"OPEC+ May Increase Production After Excluding Russia"... Significant Impact Expected If Implemented

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Due to Western sanctions against Russia, the natural gas exports of Russia's state-owned gas company Gazprom have decreased by nearly 30% compared to the previous year. So far, the sharp rise in gas prices continues, so the direct impact is not considered significant. However, there are concerns that major oil-producing countries may decide to increase production excluding Russia, and with the growing possibility of Russia's default, there is a risk that the Russian economy could contract rapidly.

According to TASS news agency on the 1st (local time), Gazprom reported that Russia's natural gas exports for the first five months of this year, up to last month, decreased by 28% compared to the same period last year. This decline is attributed to Western sanctions led by the United States and the European Union (EU) against Russia, and it is known that at least 20 billion cubic meters of gas exports have been reduced since the start of the Ukraine invasion.

For now, despite the decrease in export volume, the continued surge in natural gas prices means the Russian economy has not suffered a significant immediate blow. According to the U.S. Energy Information Administration (EIA), since Russia's invasion of Ukraine on February 24, Russia's natural gas export revenue has reached $47 billion (approximately 58 trillion won), more than doubling compared to the same period last year.

[Image source=AP Yonhap News]

However, there is a possibility that major oil-producing countries will decide to increase oil production under pressure from the United States and the West. According to the Wall Street Journal (WSJ), ahead of the OPEC+ meeting scheduled for the 2nd, major oil-producing countries including Saudi Arabia are reportedly discussing new production increases while excluding Russia from the production agreement.

Russia is the world's third-largest oil producer and holds a significant share in OPEC+, but with the expansion of sanctions against Russia, its export volume continues to decline, weakening its market dominance. If OPEC+ countries announce production increases equivalent to Russia's export decline, oil and natural gas prices are expected to drop significantly.

There are also forecasts that Russia's default is imminent. The Credit Derivatives Determinations Committee (CDDC) under the International Swaps and Derivatives Association (ISDA) ruled on the day that Russia failed to make partial interest payments. It is reported that Russia did not pay $1.9 million (approximately 230 million won) in interest on bonds maturing on April 4. Since Russia has repaid the principal and interest of the bonds, this ruling itself did not constitute an official default. However, if interest payments on two other bonds, whose grace period ends on the 26th of this month, fail, an official default is expected to be declared.

This content was produced with the assistance of AI translation services.