Russia Considers AI Data Centers As Collapsing Gas Sales Create Glut

Authored by Charles Kennedy via OilPrice.com,

Russia could use its excess natural gas to power AI data centers or crypto mining operations, Russian officials have said, as Moscow’s pipeline gas exports to Europe have collapsed and led to an oversupply at home.

Russian gas supply via pipelines to Europe has slumped since 2022, after Russia cut off many EU customers from its gas deliveries, and Nord Stream stopped supplying gas to Germany, after Russia reduced flows and after a sabotage in September 2022.

“Previously, half a billion cubic meters per day went through the gas pipelines to the West, but now it does not, and the question of what to do with this gas is very urgent,” Alexei Chekunkov, Minister for the Development of the Russian Far East and Arctic, said at a recent economic forum in St. Petersburg, as carried by Reuters.

Last month, Chekunkov said that excess gas could be used to power cryptocurrency mining.

“We have plenty of gas that was previously sold to Europe, but now lies unused underground. Please, set up power installations and start mining,” the minister was quoted as saying by the TASS news agency.

However, First Deputy Energy Minister Pavel Sorokin said at the St. Petersburg forum that Russia’s natural gas extraction is becoming more expensive and it wouldn’t be economically feasible to power data centers with gas. Rather, Russia should use coal for power to feed data centers, Sorokin added.

“We assume gas is cheap, but this isn’t true. If we continue thinking this way, there will be no gas left anywhere. The Soviet legacy reserves are depleting, the same applies to oil, while new sources like Sakhalin and Kirinskoye involve very expensive gas,” Russian news agency Interfax quoted Sorokin as saying.

“We can build power plants at open-pit mines – yes, it’s expensive now, but options exist – we immediately save $50-$60 in transport costs per tonne, save on electricity transmission, and free up gas supplies to develop fertilizers in the Far East, gas-intensive industries, or meet existing supply commitments,” he added.