Russia’s energy sector faces a transitional period in 2026: sanctions and reform.

An article featuring expert commentary by Natalia Ivanova, Director of the petrochemical company JSC NAPOR, has been published in the *Argumenty i Fakty* newspaper (Chelyabinsk region). The piece analyzes the transitional period that the Russian fuel and energy sector is set to enter in 2026, examining the impact of sanctions and tax reform on the oil and gas industry, as well as key risks and challenges facing small and medium-sized enterprises operating in service and related segments of the sector.

The 19th package of EU and US sanctions includes a ban on the import of Russian LNG into Europe starting in 2026–2027. At the same time, restrictions on the export and financial operations of Russia’s largest energy companies have been expanded. These measures affect not only major oil and gas players but also small and medium-sized enterprises operating in service and related sectors.

2025 proved to be a major challenge for the industry, and in 2026, the energy sector must adapt to a new operating model characterized by intensifying external and internal pressures. Natalia Ivanova, Director of the petrochemical company Napor, discusses the challenges facing the Russian energy sector in 2026.
Declining financial performance: trillions of rubles in lost revenue. From January to November 2025, oil and gas company revenues fell by 21.4% to 8.029 trillion rubles—a drop of 2.312 trillion rubles compared to the same period the previous year. In November alone, the decline reached 33.8%, with revenue falling to 530.9 billion rubles—270.8 billion rubles below 2024 levels.

The pressure is particularly evident among major market players: Rosneft’s net profit dropped by more than 70% in the first nine months of 2025. Sanctions have been a decisive factor in this trend. The difficulties faced by major companies are rippling down the supply chain, leaving contractors to grapple with reduced orders and restricted financing.

As of January 2025, the US has expanded sanctions against Gazprom Neft, Surgutneftegas, over 180 tankers, and approximately 200 energy-sector companies. Restrictions also affected NOVATEK, specifically regarding LNG exports.

Key consequences include the unavailability of the ice-class fleet previously ordered from South Korea; an EU ban on LNG re-exports, which disrupted Yamal LNG logistics via European terminals; and technological constraints affecting LNG facilities under construction. Consequently, NOVATEK has suspended the implementation of the Murmansk LNG (20 million tonnes) and Obsky LNG (6 million tonnes) projects, focusing instead on Arctic LNG 2.

The Russian LNG sector proved more vulnerable than the oil sector, as a significant portion of its technology and infrastructure relied on foreign suppliers.

The SME sector is feeling the impact of sanctions in several areas: a drop in service orders, a shift toward using existing inventory rather than making new purchases, rising logistics costs, and stagnant prices—remaining at 2025 levels despite 7–9% inflation.

To stay afloat, some companies are cutting production costs by simplifying chemical formulations. This creates specific risks—most notably, accelerating the wear and tear of processing equipment by two to three times, as well as potentially compromising oil quality and incurring export penalties.

The delayed consequences of these measures may only become apparent once industry demand recovers. The 2026 tax reform presents an additional source of pressure: starting January 1, 2026, the VAT rate will rise from 20% to 22%, and the threshold for VAT exemption will be gradually lowered from 60 million to 10 million rubles by 2028. For SMEs, this entails reduced net profit (a loss of approximately 200,000 rubles on 10 million rubles in revenue), a heavier administrative burden, and increased production costs for companies using the Simplified Taxation System (STS).

While the current moratorium on fines mitigates risks during the initial transition phase in 2026, it does not offset the additional expenses.

• Diversification of customers and geographic reach
• Utilization of tax incentives in Russian Special Economic Zones (SEZs)
• Access to state support totaling RUB 308.8 billion through 2030
• Investment in domestic drilling and hydraulic fracturing technologies
• Maintaining product quality as a key competitive advantage

Such measures will help companies reduce their dependence on external factors.

Analysts expect the Russian oilfield services market to show moderate growth in the coming years—averaging around 10% annually between 2025 and 2027. Forecasts suggest the market volume could reach RUB 3.4 trillion by 2027.
However, the industry will develop amidst significant pressure. Market dynamics will continue to be influenced by factors such as a drop in Brent crude prices to $60 per barrel in 2026, a weakening of the ruble to an average annual rate of 94.3 rubles per dollar, a key interest rate of 13–15%, and an increased tax burden.

Nevertheless, there are supporting factors capable of mitigating these external and internal pressures. These include government programs to develop small and medium-sized enterprises, the expanding presence of independent oilfield service companies, and sustained demand for the technological solutions required to develop hard-to-recover hydrocarbon reserves. The year 2026 will mark a transitional phase for the Russian fuel and energy sector, requiring market participants to adapt to new economic conditions.

For companies, priorities will include boosting operational efficiency, strengthening technological independence, developing a local supply base for equipment and petrochemical materials, and flexibly restructuring business processes to align with changing regulatory and market requirements. Despite ongoing sanctions pressure, the domestic market offers opportunities for the further development of homegrown technologies and for Russian companies to establish themselves as resilient industry players in the long term.