Gazprom Blue Hydrogen Strategy, 1 Kovykta Pilot, and 1 CNPC Pipeline Deal (2025)

Blue Hydrogen Strategy, Gazprom’s Gas-Centric Approach

In 2025, Gazprom’s hydrogen strategy is defined by a calculated divergence from the global focus on green hydrogen, instead prioritizing low-carbon hydrogen derived from its vast natural gas reserves. This approach leverages existing assets and infrastructure to avoid the high capital expenditure and project risks plaguing the green hydrogen sector, positioning the company as a producer of blue or turquoise hydrogen while the market for new energy forms matures.

Gazprom’s Official Mandate

The company’s strategic direction is explicitly articulated in its corporate mandate to lead the “Development of hydrogen energy and decarbonization of industry and transport on the basis of natural gas.” This formal strategy, consistent from 2021 through 2025, confirms a focus on leveraging core competencies rather than entering the renewable-powered electrolysis market. This contrasts with the strategies of peers like BP, which, despite recent pullbacks, have invested in green hydrogen projects.

The 2025 Kovykta Pilot

The strategy materialized on April 16, 2025, with the first production of hydrogen from the Kovykta gas field. This pilot project serves as a technical validation of Gazprom’s gas-centric approach. Critically, the company stated that any production scale-up is contingent on the emergence of market demand, indicating a cautious, demand-driven expansion plan rather than speculative investment. This stands in contrast to the numerous speculative green hydrogen projects globally, many of which stalled in 2025.

$7 B in Canceled Grants, US DOE vs. Gazprom’s Self-Funded Pilot

Gazprom’s self-funded, incremental approach to hydrogen development appears risk-averse when contrasted with the subsidy-dependent and volatile green hydrogen project landscape in the West. The cancellation of major government funding programs in 2025 highlights the financing fragility that Gazprom’s strategy is designed to avoid, even as other state-owned enterprises like Saudi Aramco pursue large-scale blue hydrogen projects with international partners.

• In October 2025, the U.S. Department of Energy moved to cancel all remaining grants for its $7 billion hydrogen hub program, according to leaked documents, signaling a major disruption for project financing in the United States.
• This followed broader trends of project instability, with a 2025 Deloitte report noting over 75% of green hydrogen projects are at risk due to regulatory and financing hurdles.
• Gazprom’s Kovykta pilot, developed using its own resources and integrated with existing gas operations, is insulated from this specific type of policy and subsidy risk.
• While the global green hydrogen market was valued at approximately $12 billion in 2025, its growth is highly dependent on policy support that has proven unreliable, reinforcing the logic behind Gazprom’s more conservative, asset-based strategy.

Table: Key Hydrogen Project Developments (2025)

Gazprom 2 Major Pipeline Deals With CNPC and Kazakhstan (2025)

Gazprom’s partnership activities in 2025 were overwhelmingly focused on securing long-term natural gas export routes to the East, not on building a green hydrogen ecosystem. These large-scale infrastructure agreements reinforce that the company’s primary strategic priority and capital allocation are directed at its core gas business, with hydrogen being a future, adjacent opportunity dependent on this same infrastructure.

Power of Siberia 2 Agreement

The most significant partnership in 2025 was the legally binding agreement signed with China National Petroleum Corporation (CNPC) on September 3, 2025, to construct the Power of Siberia 2 pipeline. This project, with a planned capacity of 50 billion cubic meters of natural gas per year, solidifies China as Gazprom’s key strategic market. The pipeline infrastructure could also be used to transport hydrogen blends in the future, aligning with the company’s long-term hydrogen vision and Petro China‘s role in the domestic market.

Kazakhstan Pipeline Mo U

On November 10, 2025, Gazprom signed a Memorandum of Understanding (Mo U) with the government of Kazakhstan to jointly develop a new cross-border gas pipeline. This further illustrates a regional strategy centered on expanding natural gas transport networks. While not directly a hydrogen deal, it strengthens the infrastructure foundation upon which Gazprom’s blue hydrogen strategy would be built.

Table: Gazprom Strategic Partnerships (2025)

Russia-China Axis vs. EU, Gazprom Geographic Hydrogen Focus

Gazprom’s geographic focus for its future hydrogen business is oriented toward Asia, particularly China, creating a strategic divergence from the European Union’s push for a renewable-only hydrogen economy. This pivot East aligns with its natural gas strategy but carries long-term market access risk, as its gas-derived hydrogen may not meet the increasingly stringent “green” criteria of Western markets.

• The EU has set a target for renewable hydrogen to cover around 10% of its energy needs by 2050, with a goal to produce 10 million tonnes domestically by 2030. This policy framework implicitly favors green hydrogen over the blue or turquoise hydrogen Gazprom plans to produce.
• In contrast, China announced in January 2025 that it would accelerate the development of “low-carbon hydrogen, ” a broader definition that could include gas-derived hydrogen. This creates a potential large-scale demand center for Gazprom’s future product.
• Gazprom’s investment in the Power of Siberia 2 pipeline to China is the clearest signal of its geographic priority. This infrastructure is central to its ability to supply energy to a market that is more technologically and politically agnostic about hydrogen’s production pathway compared to the EU.
• While international oil companies like Exxon Mobil and Total Energies are developing both blue and green hydrogen projects to serve multiple regions, Gazprom’s strategy appears more concentrated on leveraging its existing assets to serve a specific, non-EU market.

Technology Maturity, Gazprom’s Methane Pyrolysis vs. Green Electrolysis

Gazprom is pursuing a technology pathway for hydrogen production that capitalizes on its core competencies in natural gas, favoring methane pyrolysis over the electrolysis technology central to the green hydrogen sector. This choice reflects a pragmatic assessment of current cost structures and infrastructure realities, allowing the company to enter the decarbonization market without bearing the risks of the still-maturing green hydrogen value chain.

Methane Pyrolysis Pathway

Methane pyrolysis (turquoise hydrogen) is identified as a highly attractive technology for regions with extensive natural gas pipeline infrastructure. The process converts methane into hydrogen gas and solid carbon, avoiding direct CO 2 emissions. This method aligns perfectly with Gazprom’s asset base and its existing pipelines, which were confirmed in February 2025 to be technically capable of transporting a blend with up to 20% hydrogen.

Cost and Scale Challenges

This approach circumvents the primary challenges facing green hydrogen. In 2026, unsubsidized green hydrogen production costs are expected to average between $2.50 and $7.00 per kilogram, making it uncompetitive with fossil-fuel-based alternatives. Methane pyrolysis, while still developing, offers a potential cost advantage by using natural gas as a cheap feedstock and avoiding the massive capital cost of building dedicated renewable energy capacity for electrolysis. Gazprom’s Kovykta pilot is the first step in validating this technological and economic model at scale.

Gazprom SWOT Analysis for Blue Hydrogen (2021-2025)

Gazprom’s strategic positioning in the emerging hydrogen economy is characterized by its immense strength in natural gas resources and infrastructure, which provides a clear pathway to blue hydrogen production. However, this focus creates a significant weakness in the high-growth green hydrogen segment and exposes the company to long-term market access threats from regions mandating renewable-only energy sources.

Table: SWOT Analysis for Gazprom’s Hydrogen Strategy

1 Major Signal, Gazprom’s Hydrogen Scale-Up Hinges on China

The single most critical factor determining the future of Gazprom’s hydrogen business is the emergence of tangible, large-scale demand for low-carbon hydrogen from China. While the 2025 Kovykta pilot successfully demonstrated technical feasibility, the company’s “wait-and-see” approach to commercial scale-up means that all eyes are on Beijing’s next moves.

The Chinese Demand Signal

If China follows its January 2025 policy announcement with concrete offtake agreements or industrial decarbonization mandates that favor low-carbon hydrogen, watch for Gazprom to announce a significant expansion of its hydrogen production capabilities. The Power of Siberia 2 pipeline agreement with CNPC is the physical enabler for this scenario, creating a direct route to supply a potentially massive market.

Contingency on Cost

This expansion is also contingent on Gazprom’s ability to produce hydrogen from natural gas at a cost that is competitive with both domestic Chinese production (e.g., from coal) and other international suppliers. The success of its methane pyrolysis technology at scale will be crucial. These developments would confirm that Gazprom is successfully executing its strategy to pivot East and establish a new energy export business alongside its traditional natural gas sales.

The questions your competitors are already asking

This report covers one angle of Gazprom’s commercial strategy for hydrogen. The questions that matter most depend on your work.

• China’s actual demand for low-carbon hydrogen
• Power of Siberia 2 pipeline progress
• Cost of hydrogen from methane pyrolysis
• EU rules for importing low-carbon hydrogen

This report does not answer these. Enki Brief Pro does.

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