How the Ukraine conflict could change Europe’s dependence on Russian natural gas

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Which EU countries import the most Russian gas?

Share of the country’s natural gas

Imports from Russia, 2020

Arrow width proportional

to the country’s gas share

Exports from Russia.

Which EU countries import the most Russian gas?

Share of the country’s natural gas

Imports from Russia, 2020

Arrow width proportional to

Country’s share of gas exports

from Russia.

Which countries import the most Russian gas?

Share of country’s natural gas imports from Russia, 2020

Arrow width proportional to country

Share of gas exports from Russia


Source: EuroStat and UK Department for Business, Energy and Industrial Strategy

Note: Austria did not report the source of its natural gas imports in 2020. The data includes both pipeline and liquefied natural gas.

Europe relies on Russia’s natural gas to heat millions of homes, generate electricity and power factories. With Russian troops massed on the Ukrainian border, Europe’s heavy reliance on Russia is limiting its diplomatic options and threatening to shake its energy supplies.

If the flow of gas is disrupted, either as collateral damage from warfare or as a negotiating tactic by Russian President Vladimir V. Putin, experts fear that already high prices could skyrocket in an ever-changing global market. Businesses could be forced to close temporarily, and if the disruptions continue, households already facing higher utility bills this winter could feel even more pain.

It is a crucial time for many European nations, who have joined others around the world in turning to natural gas to help them bridge their transition from polluting fossil fuels to wind, solar and other cleaner sources.

Analysts and industry leaders are skeptical that Mr Putin would turn off the gas, partly because gas exports are so important to his country’s economy.

Diplomatic proposals to counter Russia’s build-up of sanctions that could restrict energy trade. That could jeopardize billions of dollars in investments and oil and gas contracts, especially for countries like Germany and Italy, which rely more than others on Russian gas.

Like the dependency of each country Russian gas has changed

Share of total natural gas imports from Russia

Germany

From somewhere else From Russia 0% 25% 50% 75% 100% 1990 2000 2010 2020

Lithuania

0% 25% 50% 75% 100% 1990 2000 2010 2020

Poland

0% 25% 50% 75% 100% 1990 2000 2010 2020

France

0% 25% 50% 75% 100% 1990 2000 2010 2020

Netherlands

0% 25% 50% 75% 100% 1990 2000 2010 2020

Italy

0% 25% 50% 75% 100% 1990 2000 2010 2020

Source: EuroStat

In 2021, 38 percent of the natural gas consumed by the European Union came from Russia, according to Bruegel, a research organization. Some countries, such as Poland and Lithuania, have gradually reduced their dependence on Russian gas. For others, the dependency has grown steadily.

Germany, which is at the center of the diplomatic dispute, is Moscow’s most important customer. Most of the gas to Germany flows directly from Russia through a major pipeline in the Baltic Sea known as the Nord Stream. A second pipeline, Nord Stream 2, was recently completed at a cost of $11 billion.

Fuel has yet to flow through Nord Stream 2. American lawmakers have in recent months called for its opening to be blocked as critics warn the new pipeline could allow Moscow to exert greater influence on the continent and free Ukraine from transit fees through its existing pipeline network, which are vital to Kiev’s economy are of crucial importance.

President Biden said Nord Stream 2 will not move forward if Russia invades Ukraine. But as a nod to how energy politics and economics are intertwined, the pipeline’s operating company is headed by a former German Chancellor, Gerhard Schröder.

Several large pipelines bring Russian gas to Europe, where it flows through a huge interconnected grid. The amount of gas crossing Ukraine has declined sharply over the past decade, although it remains an important route. Other lines include the Yamal pipeline through Poland and TurkStream, which feeds Turkey but also brings gas to southern Europe.

If the gas stopped flowing, the importing countries would have to find other sources. Part of the difference would most likely be made up by more LNG coming in from sources around the world.






Natural gas pipelines and LNG terminals in Europe

Liquefied, of course

Gas terminal (LNG).

Proposed LNG terminal

or under construction

Big pipeline for

Natural gas from Russia

Germany is one of the countries under consideration

to reduce the construction of an LNG infrastructure

Dependence on pipe-bound natural gas.

While natural gas flows have fluctuated and recently declined, about a third of Russia’s gas exports to Europe normally go through Ukraine.

natural gas pipelines

and LNG terminals

in Europe

Large pipeline for gas from Russia

Liquefied natural gas (LNG) terminal.

LNG terminal planned or under construction

Germany is one of them

consider countries

Build LNG

infrastructure

reduce dependency

on pipeline natural gas.

While natural gas flows vary and

about a third have fallen recently

of Russia’s gas exports to Europe

usually go through Ukraine.

Natural gas pipelines and LNG terminals in Europe

Large pipeline for gas from Russia

Liquefied natural gas (LNG) terminal.

LNG terminal planned or under construction

Germany is one of them

consider countries

Build LNG

infrastructure

reduce dependency

on pipeline natural gas.

While natural gas flows vary and

about a third have fallen recently

of Russia’s gas exports to Europe

usually go through Ukraine.


Sources: SciGRID; European Network of Transmission System Operators for Gas (ENTSOG)

Liquefied natural gas is made by cooling gas to about minus 260 degrees Fahrenheit so it can be converted to liquid form and more easily loaded onto ships. The major advantage is that it can be stably transported from long distances, including from Australia and the United States – offering viable alternatives for local or regional sources.

In recent months, Europe has witnessed something of a dress rehearsal for Russian gas cuts as Moscow cuts supplies to Europe in what some analysts and politicians say is an attempt to keep prices high. According to the International Energy Agency, Russia reduced its gas exports via pipeline to Europe by 23 percent in the last quarter of 2021 compared to the same period last year. At the same time, imports of liquefied gas increased.


Natural gas imports to Europe by origin

5-day moving averages





million cubic meters per day

million cubic meters per day

million cubic meters per day


Source: Wood Mackenzie

In reality, gas markets are far from static, with the volume and direction of flows being largely determined by price. And although the crisis has not yet led to military action, the threat of conflict looms large in the markets. Prices in Europe were already high at the end of the year as limited stocks raised concerns that there would be enough fuel for the winter.

While they’ve since recovered from December’s records, they’re still about four times what they were a year ago.


Natural gas price in Europe

Dutch TTF commodity futures contracts

Source: Refinitiv

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