Energy in Russia

Based on Wikipedia: Energy in Russia

In August 2025, Russia's revenues from oil product exports fell to five-year lows. President Vladimir Putin, in a rare public acknowledgment of strain on the energy system that once made Russia a global superpower, pointed to the country's vast coal reserves as a way to offset what he described as a gas shortage, insufficient infrastructure, and an under-developed grid economy. For a nation that had spent decades positioning itself as Europe's indispensable energy supplier, this was a remarkable admission.

The story of energy in Russia is the story of modern Russia itself—a tale of staggering natural wealth, geopolitical leverage, sudden reversals, and the limits of resource power in a changing world.

The Resource Colossus

Russia's energy endowment reads like geological fiction. The country holds the world's largest proven natural gas reserves, the second-largest coal reserves, and the eighth-largest oil reserves. To put this in perspective: Russia controls roughly 32 percent of the world's proven natural gas reserves—nearly a third of all the gas we know exists beneath the earth's surface.

But reserves are just potential. What made Russia an "energy superpower"—a term widely applied to the country through the 2010s—was its ability to extract these resources and deliver them to customers, particularly in Europe. By the weeks before Russia's invasion of Ukraine in February 2022, the country supplied 32 percent of European Union gas demand, up from 25 percent in 2009. Europe had become increasingly dependent on Russian energy even as political tensions grew.

This dependence was not accidental. Russia built an elaborate infrastructure of pipelines stretching thousands of kilometers across Eurasia. The Druzhba pipeline system—the name means "friendship" in Russian—extends roughly 5,500 kilometers and holds the distinction of being the world's longest oil pipeline network. Before sanctions, it transported 750,000 barrels of oil per day directly to refiners in eastern and central Europe.

The Architecture of Energy Power

Understanding Russian energy requires understanding its peculiar corporate structure, which blends state control with private enterprise in ways that reflect broader patterns in Russian political economy.

Take natural gas. Gazprom, the state-owned behemoth, remains the dominant producer, accounting for 68 percent of Russian gas production in 2021. But its share has been declining as competitors like Novatek (which focuses on liquefied natural gas, or LNG—gas cooled to minus 162 degrees Celsius until it becomes liquid for shipping) and Rosneft have expanded. This creates a system where the state maintains control while allowing some market competition at the margins.

Oil shows a similar pattern. Rosneft, state-owned, leads the industry. Lukoil follows as the largest privately owned oil company. Behind them come Gazprom Neft, Surgutneftegaz, Tatneft, and Russneft. The Russian government captures value from all of them through taxes and export tariffs that, as of January 2022, accounted for 45 percent of the federal budget.

That number—45 percent—deserves emphasis. Nearly half of the Russian government's revenue came from oil and gas. This created both power and vulnerability: power because energy exports generated enormous wealth and geopolitical leverage; vulnerability because any disruption to these exports would strike directly at the state's finances.

The Geography of Extraction

Russia's energy resources are not evenly distributed. Understanding where they lie helps explain both Russian strategy and its constraints.

Oil and gas production historically concentrated in West Siberia, but investment has shifted over the past decade toward three new frontiers: the Yamal Peninsula in the Arctic, Eastern Siberia, and the Far East including offshore Arctic regions. The Arctic now accounts for over 80 percent of Russia's natural gas production and an estimated 20 percent of its crude oil production.

Climate change presents Russia with a peculiar opportunity here. As Arctic ice recedes, previously inaccessible deposits become reachable, and Arctic trade routes open for longer periods, allowing seaborne deliveries of fossil fuels—particularly to Asian markets. Of course, this opportunity depends on having the specialized equipment to exploit it, including ice-breaking LNG tankers, and sanctions have complicated efforts to build such vessels.

Coal tells a different geographic story. The principal hard coal deposits sit in the Pechora basin in the far north and the Kuznetsk basin in southwestern Siberia. The Kansk-Achinsk basin holds enormous deposits of brown coal, a lower-grade fuel. The vast Siberian Lena and Tunguska basins remain largely unexplored—probably commercially difficult to exploit even if they were surveyed.

Pipelines: The Arteries of Power

What distinguishes pipeline gas from other forms of energy is its lock-in effect. Once you build a pipeline connecting a producer to a consumer, both parties become dependent on that relationship. The producer has invested billions in infrastructure that can only serve specific customers; the consumer has built power plants and heating systems designed to burn that particular fuel.

Russia exploited this dynamic systematically. The TurkStream pipeline sends gas directly into Europe via Turkey. Power of Siberia, a roughly 3,000-kilometer pipeline launched in late 2019, connects far eastern Russian gas fields directly to China—part of Russia's "pivot to Asia" that predated the Ukraine conflict.

Plans exist for Power of Siberia 2, which would carry 50 billion cubic meters per year from West Siberian gas fields to China. As of the latest available information, however, no supply agreements or final investment decisions had been reached. This matters because it illustrates a key constraint: pipelines require decades of commitment from both buyer and seller. China, watching what happened to European-Russian energy relations, may be cautious about becoming the next dependent customer.

The Pivot That Wasn't—Until It Had to Be

Russian energy strategists had long discussed reducing dependence on European markets. The 2012 launch of the Eastern Siberia-Pacific Ocean oil pipeline, a 4,740-kilometer conduit capable of carrying 1.6 million barrels per day to Asian markets, represented this thinking. So did investments in LNG capacity to compete with growing exports from the United States, Australia, and Qatar.

But these were hedges, not replacements. In 2021, Russia exported 40 billion cubic meters of LNG, making it the world's fourth-largest LNG exporter—but this represented only about 8 percent of global supply. Pipeline gas to Europe remained the core business.

Then came February 2022.

The European Union's response to Russia's invasion of Ukraine included a decision to cease buying Russian energy. Russia lost 75 percent of its export market in that sector. The forced pivot to Asia that Russia had discussed for years suddenly became urgent necessity rather than long-term strategy.

The problem: infrastructure doesn't pivot quickly. Pipelines running west cannot suddenly run east. Limited eastward rail capacity creates severe bottlenecks for coal exports to Asia. The ships, storage facilities, and port infrastructure needed to redirect energy flows require years to build—and sanctions complicate access to the technology needed to build them.

Beyond Fossil Fuels: Nuclear and Hydro

Russia's energy story extends beyond oil, gas, and coal. The country holds a pioneering place in nuclear power history: Russia built the world's first civilian nuclear power plant. Today, 38 nuclear reactors operate across the country, producing 29.4 gigawatts of electricity—making Russia the world's fourth-largest nuclear energy producer.

The nuclear sector is organized under Atomenergoprom, a holding company created in 2007 that consolidates the civil nuclear industry, including reactor operations (Energoatom), nuclear fuel production (TVEL), uranium trading (Tekhsnabexport, known as Tenex), and facility construction (Atomstroyexport). Russia ranks as the world's seventh-largest uranium producer, accounting for about 4.7 percent of global output, with mining concentrated in regions east of the Ural Mountains.

Hydropower contributes another 20 percent of Russian electricity. The country operates 102 hydropower plants, with RusHydro ranking as the world's second-largest hydroelectric power producer. Russia's hydro potential far exceeds current utilization: gross theoretical potential is 2,295 terawatt-hours per year, of which 852 terawatt-hours is considered economically feasible. Most of this untapped potential lies in Siberia and the Far East, far from major population centers—a recurring theme in Russian energy geography.

The Roads Not Taken

Russia possesses substantial renewable energy resources beyond hydropower. The country has geothermal potential in the Northern Caucasus, Western Siberia, Lake Baikal region, and particularly in Kamchatka and the Kuril Islands, where volcanic activity provides accessible heat. Solar radiation potential is strong in the North Caucasus, around the Black Sea and Caspian Sea, and in southern Siberia. Wind resources are excellent along the Pacific and Arctic coasts and in the vast steppe and mountain regions.

Yet non-hydroelectric renewable energy remains largely undeveloped. By the end of 2006, total installed wind capacity was just 15 megawatts—a trivial amount compared to countries like Germany or Denmark. A single solar power plant, the 1.5-megawatt Kislovodskaya facility, faced repeated construction delays.

Why the lag? Two factors stand out. First, low domestic energy prices and subsidies for natural gas make renewable alternatives economically unattractive. When gas is cheap, why invest in solar panels or wind turbines? Second, Russia lacks what energy analysts call a "conducive framework"—the combination of regulations, incentives, and grid access rules that have driven renewable energy adoption elsewhere.

There is a certain irony here. Russia's fossil fuel abundance, which provided so much wealth and power, also removed the pressure to develop alternatives. Countries without domestic oil and gas had strong incentives to pioneer solar and wind; Russia could simply burn its own resources.

The Numbers Behind the Power

Russia ranks as the world's fourth-largest electricity producer, after China, the United States, and India. In 2020, the country produced 1,085 terawatt-hours and exported 20 terawatt-hours. The generation mix breaks down roughly as: 60 percent fossil fuels (primarily gas), 20 percent hydroelectricity, and 20 percent nuclear. Renewable energy generation beyond hydro remains minimal.

Total energy consumption across Russia in 2020 was 7,863 terawatt-hours. To contextualize: Russia is the world's fourth-highest greenhouse gas emitter. In 2019, Russia adopted the Paris Agreement and announced an aim to be carbon neutral by 2060—though analysts have questioned assumptions about Russian forests absorbing emissions from fossil fuel combustion.

The Oligarchs of Energy

No discussion of Russian energy would be complete without acknowledging who has profited from it. The Forbes billionaire rankings from 2013 included 21 Russian energy billionaires, with combined wealth in the tens of billions of dollars. Names like Mikhail Fridman ($16.5 billion), Leonid Michelson ($15.4 billion), Viktor Vekselberg ($15.1 billion), and Vagit Alekperov ($14.8 billion) sat near the top of global wealth rankings.

These fortunes were made in the chaotic privatizations of the 1990s and the oil price boom of the 2000s. The relationship between these oligarchs and the Russian state has always been complex—cooperation when interests aligned, conflict when they diverged, and a general understanding that political ambitions that threatened the Kremlin would not be tolerated.

The Present Moment

As of 2025, Russia's energy sector faces its greatest challenge since the Soviet collapse. The loss of European markets forced rapid reorientation. Infrastructure constraints limit how quickly exports can pivot eastward. Revenues have declined to five-year lows. The coal reserves that Putin pointed to as a solution require transportation infrastructure that doesn't yet exist at sufficient scale.

Meanwhile, the fundamental fact of Russian energy wealth remains. The gas is still in the ground. The coal seams still hold their billions of tonnes. The challenge is not the resource base but the geopolitical and infrastructure constraints on accessing markets.

Russia's energy story is ultimately about the difference between potential and realization, between geological wealth and economic value. A country can possess a third of the world's proven natural gas reserves and still face an energy crisis if it cannot find buyers willing to purchase that gas at prices that sustain the economy.

For decades, geography and infrastructure locked Europe and Russia together in an energy relationship that proved far more durable than the political relationship. The rupture of 2022 demonstrated that even the deepest economic interdependence can shatter when other considerations override. What comes next—for Russian energy, for European energy security, for global energy markets—remains one of the defining questions of the current era.