Despite the ongoing sanctions imposed by Ukraine and Western allies, Russia’s gas imports to Europe have surpassed those of the United States. This shift, occurring for the first time in almost two years, underscores the complex dynamics at play in Europe’s energy landscape.
The reversal, which took place in May 2023, highlights the ongoing challenges Europe faces in reducing its dependence on Russian gas. Several eastern European countries continue to rely heavily on imports from their neighbor, underscoring the difficulty of completely decoupling from Russia’s energy supply.
Immediately after Russia’s full-scale invasion of Ukraine in February 2022, it significantly reduced its pipeline gas supplies to Europe. In response, the region stepped up imports of liquefied natural gas (LNG), with the US becoming a major supplier.
With the implementation of sanctions and Russia’s retaliatory actions, the United States overtook Russia as Europe’s main gas supplier in September 2022. Since then, the US has accounted for approximately a fifth of the region’s LNG supply.
However, according to data from ICIS, Russian-piped gas and LNG shipments accounted for 15% of total supply to the European Union, the United Kingdom, Switzerland, Serbia, Bosnia and Herzegovina, and North Macedonia in May 2023. During the same period, LNG from the United States contributed 14% of supply to the region, marking its lowest share since August 2022.
The reversal is attributed to a general increase in European imports of Russian LNG. It’s important to note that Russia continues to supply gas to Europe via pipelines through Ukraine and Turkey. May’s gas flow patterns were also influenced by various temporary factors, including an outage at a major US LNG export facility and Russia’s increased gas shipments through Turkey ahead of planned maintenance in June.
However, ICIS’s Tom Marzec-Manser, head of gas analytics, suggests that this shift is unlikely to be sustained. Later this year, Russia intends to utilize its Northern Sea Route to ship LNG to Asia, potentially reducing the amount of LNG sent to Europe. Simultaneously, US LNG production has been increasing, with more capacity expected to come online by the year’s end.
Manser explains that Russia’s ability to maintain its market share in Europe will be limited as gas demand increases in the upcoming winter. Meanwhile, US LNG production is on an upward trajectory, with new capacity entering the global market.
Another significant factor is the transit agreement between Ukraine and Russia, which is set to expire later this year. This raises concerns about the future of gas flows through this route.
The recent shift in Europe’s gas imports underscores the ongoing complexities of the region’s energy landscape. As the sanctions imposed on Russia remain in place, the future of energy relations between Russia and Europe remains uncertain.
