Two sources familiar with Gazprom's trading have said that the Russian gas giant has increased its oil activity to offset the weaker natural gas business over the last year.

Due to the deep rift that exists between Russia and Western countries over the Ukraine conflict, Gazprom, owned by the Kremlin, has lost the European Gas Market, which was once the source for around two thirds of its revenue.

The company also reduced natural gas production 13%, to a record low of 359 billion cubic metres (bcm), from 412,94 bcm.

Gazprom’s oil arm, Gazprom Nept, has done better than its parent company, thanks to the booming oil business.

According to two people and four sources, the Gazprom export division is now trying to increase its exposure in the oil business, and will be handling more ESPO oil grades and Siberian Light oil exported to Asia.

Gazprom has not responded to our request for a comment.

ESPO CONDENSATE

The Russian oil exports were a steady profit generator for Moscow over the last two years, despite Western sanctions. Russia was able divert to India and China.

Sources and data from the market indicate that Gazprom export, which was only a minor oil-exporter before 2022, increased oil exports during the second half 2023. It plans to increase them even further in 2024.

One source said that "Gazprom’s oil pipeline exports doubled in 2023, and they are expected to do so again in 2024".

The port of Kozmino in Russia's Pacific region is an important outlet for Gazprom crude exports. ESPO Blend oil is one of the most lucrative routes for Russian oil producers compared with other routes, thanks to the high quality and proximity of main customers in Asia.

Export data cites sources that say the oil loadings of Gazprom from Kozmino increased from 30,000 to 50,000 tons per week last year to two to three 100,000 ton vessels per week this year. These volumes are in addition to Gazprom's exports, which include ESPO Blend oil.

Sources said that in May of this year, Gazprom loaded for the first-time 80,000 tons Siberian Light Grade from Novorossiisk. They added that the company intends to diversify its oil supply.

Gazprom's production of condensate is also expected to increase. Gazprom doesn't disclose its production figures.

The company began production in May at the Urengoysky Oilfield, which is expected to produce 1,5 million tons of condensate annually.