The West’s sanctions on Russia have led to a $237.5bn decline in the eastern Europe oil and gas project pipeline, with restricted access to intermediate goods and international capital halting the construction of numerous projects, according to data and analytics company GlobalData, Energy Monitor‘s parent company. 

A number of important projects being placed on hold has restricted the size of the region’s project pipeline, states the GlobalData report, Project Insight – Oil and Gas – Q2 2022. Russia dominates the pipeline, accounting for 40.4% of the $95.9bn total. Projects in the pre-execution and execution stage account for 64.2% of the total.

Russia’s Yamal liquified natural gas production and transportation plant. (Photo by Sergey Rusanov via Shutterstock)

GlobalData forecasts construction spending will reach $33.1bn in 2023 if all projects go ahead as planned and spending is evenly distributed over the construction stage – but there remain risks to projects progressing in Russia.

Chief among the frozen projects is Novatek ’s $21bn liquified natural gas plant, Yamal Arctic 2. The project is 60% complete, with the first train 80% finished and expected to come online by 2023. However, although construction is under way on the second and third trains, the passing of the 27 May 2022 deadline for foreign companies to supply Russian projects cast doubts over Yamal 2’s completion.

“In addition, the [EU] ban on [oil] imports will likely continue to suffocate upstream project growth in Russia as alienation from the West has driven down Ural crude prices and consequently driven down export revenue,” says Jack Riddleston, construction analyst at GlobalData. 

“However, as opportunities in the West have diminished, opportunities in the East have opened. As a result, India and China have taken advantage of the discounted prices. India has been on a Ural oil spending spree and China has agreed to a 30-year deal to import natural gas through the Power of Siberia, with plans to extend capacity with a new pipeline in north-east China.”