Gazprom halts Arctic drilling amid sanctions and financial woes

Record losses, sanctions limiting access to modern technologies, and China's lack of interest in a new gas supply contract have led Gazprom to abandon plans to exploit Arctic deposits, reports "The Moscow Times."

According to data from the state geological research register, Gazprom has postponed the start of drilling in the Arctic by three to four years, including activities in the Kara Sea and the Barents Sea. The Arctic shelf is estimated to hold 20% of Russia's oil resources and over 70% of its natural gas resources.

Gazprom was forced to postpone the investment due to significant financial problems and the failure of negotiations with China regarding constructing the Power of Siberia 2 gas pipeline. This project was supposed to increase gas supplies to China to 100 billion cubic metres annually.

According to industry media, Beijing agreed to purchase gas only at Russian domestic prices (about $60 per thousand cubic metres), which would make the investment unprofitable.

Last year, Gazprom recorded its first loss in 25 years, amounting to 629 billion rubles (over $7 billion CAD). Russian gas exports via pipelines fell to 69 billion cubic metres, the lowest level since 1985.

Exports to Europe, once Gazprom's main market, reached their lowest level since the late 1970s.