Russia's Share In Gas Supplies To Europe Falls To 13%

The EU is developing grounds for reducing its share to zero without paying compensation.

The share of pipeline and liquefied natural gas (LNG) supplies from Russia to the European Union in 2023 decreased to 13%, according to calculations by S&P Global Commodity Insights analysts, cited by the Financial Times.

In 2021, the share of Russian gas exports reached 40%.

Experts interviewed by the publication warn of energy risks for Europe, one of which is the restoration of gas demand. It was the massive reduction in consumption that allowed gas to accumulate in storage facilities and reduce prices.

According to S&P calculations, gas demand in Europe was expected to decrease by 7% in 2023. The analytical agency points out that the authorities in Europe are calm regarding the gas situation, which may be “false consolation.” “I don’t think we have a good idea of where the equilibrium level of demand is,” S&P Global Commodity Insights said.

The European Union is completing the development of a gas reform that will allow countries to completely ban gas imports from Russia and Belarus, FT recalls. According to experts and officials, this will help gradually reduce imports to zero without serious consequences for the European gas market. The European Commission calls rules that will allow state authorities to prohibit the reservation of capacity in gas pipelines and terminals for Russian gas, “a proportionate and targeted way” for EU countries to reduce supplies from Russia without paying significant compensation for non-compliance with contracts.

The current gas situation in the European Union contrasts sharply with the situation in 2022, when European countries, deprived of pipeline supplies from Russia, sharply began to buy LNG at the height of the energy crisis and rapidly rising fuel prices. Back then, European benchmark gas prices exceeded €300 per megawatt-hour, the FT recalls, and now gas prices are ten times lower than they were at the peak of the crisis, with storage levels well above the average for the previous five years.

The Finnish authorities have already announced their plans to use the future mechanism for refusing Russian LNG. The state-owned company Gazum was forced to continue to purchase minimum volumes of fuel from Gazprom in accordance with contracts. Helsinki believes that by 2025, thanks to gas reform, it will be possible to abandon this. As the FT previously explained, gas reform is primarily being developed to put pressure on Austria and Hungary to reduce their dependence on Russian gas.