Despite significant efforts to reduce Russian gas imports, the European Union (EU) has made limited progress since the shutdown of the Nord Stream pipeline. Analysts argue that the complete elimination of Russian gas imports is more a matter of political will than technical feasibility. Although the EU could potentially endure winter without Russian gas imports, it would require significant demand reduction and overcoming regulatory hurdles.
In response to Russia’s invasion of Ukraine, the EU has taken steps to distance itself from Russian energy commodities. This included an embargo on Russian crude oil in December 2022 and a subsequent embargo on oil products like petrol and diesel in February 2023. Over the past two years, Russian natural gas imports have decreased from approximately 450 million cubic meters per day (mcm/d) at the end of 2021 to about 150 mcm/d currently. These remaining gas flows are divided among LNG, pipeline flows through Ukraine, and other routes, including those via Turkey into Bulgaria and a small flow through Belarus into Lithuania. Despite these reductions, Europe has managed to emerge from two winter seasons with adequate gas supplies, even as Russian gas imports have been drastically cut.
By the end of the winter season in April 2024, Europe’s gas stores were nearly 60% full, a record high for that time of year. While this achievement appears impressive, it masks the fact that little progress has been made in further reducing Russian energy supplies over the past two years. Calls from several nations to completely eliminate Russian energy commodities have not been fully heeded, even as the conflict in Ukraine persists.
Energy commodity analysts at Standard Chartered have reported no significant progress in reducing Russian gas imports since the Nord Stream pipeline system was shut down. In fact, Europe’s gas imports from Russia have increased by about 50% since the first quarter of 2023. Recent military activities by Ukraine in Russia’s Kursk oblast have sparked concerns about the stability of gas flows through Ukraine, although Standard Chartered downplays these fears. The existing five-year pipeline transit agreement between Russia and Ukraine, signed in 2019, is set to expire on December 31, 2024. Kyiv has indicated it will not renew the pact, and EU energy chief Kadri Simson has expressed no interest in reviving the agreement.
Ukraine currently supplies about 5% of the EU’s total gas imports, with Austria, Hungary, and Slovakia likely to be most affected by the potential cutoff. However, analysts believe that sufficient capacity exists elsewhere to replace gas flows via Ukraine. They also note that non-Russian LNG flows into the EU have declined by approximately 140 mcm/d since April, a volume that could, if restored, replace Russian LNG nearly three times over. According to these analysts, removing the last remnants of Russian gas imports from the EU hinges more on political will than on technical constraints.
Bruegel, a Belgium-based economic think tank, supports this view but adds that the EU could survive the next winter without Russian gas, provided it addresses significant technical and regulatory challenges and reduces its annual natural gas demand by 10-15%. This demand reduction is crucial, as no amount of non-Russian imports would be sufficient to fully replenish storage ahead of the next winter.
In June, the EU imposed its first sanctions on Russian gas, marking a historic move since Russia’s invasion of Ukraine. These sanctions, though not targeting the majority of Russia’s LNG exports to the EU, aim to prevent the re-exportation of Russian LNG from EU countries and ban EU involvement in upcoming Russian LNG projects. These measures are designed to pressure Russia economically, forcing changes in its LNG export strategy, particularly in its supply routes to Asia.
Meanwhile, Norway and the U.S. have become Europe’s largest gas suppliers, replacing Russia. In 2023, Norway supplied 87.8 billion cubic meters (bcm) of gas to Europe, accounting for 30.3% of total imports, while the U.S. provided 56.2 bcm, representing 19.4% of the total.