In a striking turn of events, Europe’s gas imports from Russia surpassed those from the United States for the first time in nearly two years this May, underscoring the complex and persistent challenges the region faces in reducing its reliance on Russian fossil fuels. This development comes despite ongoing efforts to diversify energy sources following Russia’s full-scale invasion of Ukraine.
Several unique factors contributed to this reversal, but the underlying issue remains clear: Europe’s dependency on Russian gas, particularly in Eastern European countries, is proving difficult to sever. Tom Marzec-Manser, head of gas analytics at consultancy ICIS, remarked, “It’s striking to see the market share of Russian gas and liquefied natural gas inch higher in Europe after all we have been through, and all the efforts made to decouple and de-risk energy supply.”
The invasion of Ukraine by Russia in February 2022 triggered a significant shift in the European energy landscape. Moscow drastically reduced its pipeline gas supplies to Europe, prompting the region to increase its imports of liquefied natural gas (LNG), with the United States emerging as a key supplier. By September 2022, the US had overtaken Russia as the leading supplier of gas to Europe, and throughout 2023, it accounted for approximately one-fifth of the region’s gas supply.
However, in May, data from ICIS revealed that Russian-piped gas and LNG shipments accounted for 15 percent of the total supply to the European Union, the United Kingdom, Switzerland, Serbia, Bosnia and Herzegovina, and North Macedonia. In contrast, LNG from the US constituted 14 percent of the supply, marking its lowest level since August 2022.
This shift occurred amidst a broader increase in European imports of Russian LNG, despite efforts by several EU countries to impose sanctions. While Russia halted gas deliveries through pipelines to north-west Europe in mid-2022, it continues to supply gas via pipelines through Ukraine and Turkey. May’s supply dynamics were influenced by several one-time factors, including an outage at a major US LNG export facility and increased Russian shipments through Turkey in anticipation of planned maintenance in June. Additionally, demand for gas in Europe remained relatively weak, with storage levels nearing record highs for this time of year.
Marzec-Manser of ICIS suggested that this reversal is “not likely to last,” noting that Russia would likely redirect its LNG shipments to Asia via its Northern Sea Route during the summer, which would reduce the volumes sent to Europe. Concurrently, US LNG production has resumed and is expected to grow, with new capacity coming online by the end of the year. “Russia has limited flexibility to hold on to this share [in Europe] as demand [for gas] rises into next winter, whereas overall US LNG production is only growing with yet more new capacity coming to the global market by the end of the year,” he added.
A critical factor in this dynamic is the transit agreement between Ukraine and Russia, which is set to expire this year, potentially jeopardizing gas flows through this route. In response, the European Commission is supporting initiatives to enhance the capacity of pipelines in the Southern Gas Corridor, which connects the EU to Azerbaijan. However, a senior EU official indicated that current supplies through this route are insufficient to replace the 14 billion cubic meters of Russian gas that currently flow through Ukraine to the EU annually.
During a recent visit to Japan, EU Energy Commissioner Kadri Simson expressed concerns about LNG being diverted from Europe to meet rising demand in Asia. Simson reported that Tokyo and Brussels have established an “early warning system” to monitor LNG shortages and agreed that both regions should implement energy-saving measures. “The EU is prepared to buffer any negative supply or demand events in global gas markets,” she stated. “Our gas storage remains at record high levels [and] our gas demand stabilized at record low levels, down 20 percent compared with 2021.”
The interplay between these factors paints a complex picture of Europe’s ongoing struggle to secure a stable and diversified energy supply. As geopolitical tensions continue to influence energy markets, Europe must navigate a delicate balance between immediate energy needs and long-term strategies to reduce dependence on Russian gas. The developments of the coming months will be crucial in determining the region’s energy resilience and its ability to adapt to a rapidly changing global energy landscape.
