After declining three years in a row, Russian natural gas production increased 8 % last year reaching 690 billion cubic metres (including associated natural gas production). Due to limited storage possibilities, gas production trends are largely dictated by demand. Last year demand was supported by domestic economic recovery and brisk export growth. Russia's economy ministry expects gas production to decline slightly this year and increase by around 1–2 % a year in 2019 and 2020.
Russia, which accounts for nearly a fifth of total global production, is the world's second largest natural gas producer after the United States. About 90 % of Russian gas is produced in the Yamal-Nenets Autonomous Okrug, where large part of Russian gas reserves are also located. Liquefied natural gas (LNG) is produced on the Sakhalin Island and the Yamal Peninsula with the total production capacity currently standing at about 15 million metric tons (20 billion m3), or about 5 % of global LNG production.
About a third of Russian natural gas production is exported. While natural gas is an important export commodity for Russia, it is not nearly as important as oil. Export earnings on gas amounted to just over 40 billion dollars last year (compared to over 150 billion dollars on oil and oil products), or about 11 % of Russia's total earnings on goods exports.
Most Russian natural gas exports are still transmitted by pipeline, with about two-thirds going to EU countries. Other major markets include Turkey and Belarus. Practically all of Russia's LNG production currently goes to East Asian countries, which are not yet served by Russian pipelines. Completion of the first phase of the Power of Siberia gas pipeline from Russia to China is set for late 2019.