How Ukraine could reshape Europe’s dependence on Russian natural gas







Which EU countries import the most Russian gas

Country’s share of natural gas

imports from Russia, 2020

Proportional boom width

to the country’s gas share

exports from Russia.

Which EU countries import the most Russian gas

Country’s share of natural gas

imports from Russia, 2020

Arrow width proportional to

share of the country in 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 Russian gas exports





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. Data includes both pipelined natural gas and liquefied natural gas.

Europe relies on natural gas from Russia to help heat millions of homes, generate electricity and power plants. With Russian troops massed along the Ukrainian border, Europe’s heavy reliance on Russia limits its diplomatic options and threatens to disrupt its energy supplies.

If the flow of gas is interrupted, either as collateral damage of war or as a negotiation tactic of Russian President Vladimir V. Putin, experts fear that already high prices in an ever-changing global market will rise. sharply. Businesses could be forced to close temporarily, and if the cuts persist, households already facing higher utility bills this winter could feel even more pain.

This is a pivotal time for many European countries which have joined others around the world in turning to natural gas to help them transition from dirty fossil fuels to wind, solar and other cleaner sources.

Analysts and industry executives doubt Mr Putin will cut the gas, in part because of the importance of gas exports to his country’s economy.

Diplomatic proposals to counter Russia’s rise focus on sanctions that could limit energy trade. This could jeopardize billions in oil and gas investments and contracts, especially for countries, including Germany and Italy, that depend on Russian gas more than others.

How does each country’s dependence on Russian gas changed

Share of total natural gas imports from Russia

Germany

Moreover 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% of the natural gas used 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 addiction has grown steadily.

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

The fuel has yet to cross Nord Stream 2. US lawmakers have in recent months called for its opening to be blocked, as critics warn the new pipeline could allow Moscow to wield greater influence on the continent and to starve Ukraine of transit fees through its existing pipeline network. which are crucial for Kyiv’s economy.

President Biden has said Nord Stream 2 will not go ahead if Russia invades Ukraine. But in an indication of how politics and energy business are intertwined, the pipeline’s operating company is chaired by a former German chancellor, Gerhard Schröder.

Several major gas pipelines bring Russian gas to Europe, where it passes through a vast interconnected network. The amount of gas passing through Ukraine has fallen sharply over the past decade, although it remains an important route. Other conduits are the Yamal gas pipeline through Poland and TurkStream, which supplies Turkey but also brings gas to southern Europe.

If the gas stops, importing countries will have to find other sources. Some of the difference would most likely be offset by bringing in more liquefied natural gas from sources around the world.






Gas pipelines and LNG terminals in Europe

natural liquefied

gas terminal (LNG)

Proposed LNG terminal

or under construction

Major pipeline for

Russian gas

Germany is one of the countries considering

the construction of LNG infrastructure to reduce

reliance on piped natural gas.

While natural gas flows fluctuate and have recently decreased, about a third of Russian gas exports to Europe typically pass through Ukraine.

Natural gas pipelines

and LNG terminals

in Europe

Major Russian Gas Pipeline

Liquefied natural gas (LNG) terminal

LNG terminal proposed or under construction

Germany is part of

countries are considering

build LNG

Infrastructure

reduce dependency

on piped natural gas.

Although natural gas flow rates vary and

have recently fallen, about a third

Russian gas exports to Europe

usually pass through Ukraine.

Gas pipelines and LNG terminals in Europe

Major Russian Gas Pipeline

Liquefied natural gas (LNG) terminal

LNG terminal proposed or under construction

Germany is part of

countries are considering

build LNG

Infrastructure

reduce dependency

on piped natural gas.

Although natural gas flow rates vary and

have recently fallen, about a third

Russian gas exports to Europe

usually pass through Ukraine.





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


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

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


Natural gas imports in 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 volumes and direction of flows being largely dictated by price. And while the crisis has not yet led to military action, the threat of conflict hangs over the markets. Prices in Europe were already high at the end of the year, as limited storage levels raised concerns that there would be enough fuel to get through the winter.

Although they have since eased from the records reached in December, they are still about four times higher than they were a year ago.


Natural gas prices in Europe

TTF Dutch Commodity Futures




Source: Refinitiv


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