FT: Russia overtook US as gas supplier to Europe in May

WORLD  16 June 2024 - 14:45

Europe’s gas imports from Russia overtook supplies from the US for the first time in almost two years in May, despite the region’s efforts to wean itself off Russian fossil fuels since the full scale invasion of Ukraine.

While one-off factors drove the reversal, it highlights the difficulty of further reducing Europe’s dependence on gas from Russia, with several eastern European countries still relying on imports from their neighbour, The Financial Times reports.

“It’s striking to see the market share of Russian gas and [liquefied natural gas] inch higher in Europe after all we have been through, and all the efforts made to decouple and de-risk energy supply,” said Tom Marzec-Manser, head of gas analytics at consultancy ICIS.

Following Russia’s full-scale invasion of Ukraine in February 2022, Moscow slashed its pipeline gas supplies to Europe and the region stepped up imports of LNG, which is shipped on specialised vessels with the US as a major provider.

The US overtook Russia as a supplier of gas to Europe in September 2022, and has since 2023 accounted for about a fifth of the region’s supply.

But last month, Russian-piped gas and LNG shipments accounted for 15 per cent of total supply to the EU, UK, Switzerland, Serbia, Bosnia and Herzegovina and North Macedonia, according to data from ICIS.

LNG from the US made up 14 per cent of supply to the region, its lowest level since August 2022, the ICIS data showed.

Line chart of share in European gas supplies, in per cent showing Russia supplied more gas to Europe than the US in May

The reversal comes amid a general uptick in European imports of Russian LNG despite several EU countries pushing to impose sanctions on them.

Russia in mid-2022 stopped sending gas through pipelines connecting it to north-west Europe, but continues to provide supplies via pipelines through Ukraine and Turkey.

Flows in May were affected by one-time factors, including an outage at a major US LNG export facility, while Russia sent more gas through Turkey ahead of planned maintenance in June. Demand for gas in Europe also remains relatively weak, with storage levels near record highs for this time of year.

The reversal was “not likely to last”, said Marzec-Manser of ICIS, as Russia would in the summer be able to ship LNG to Asia via its Northern Sea Route. That was likely to reduce the amount sent to Europe, while US LNG production had picked up again, he said.

“Russia has limited flexibility to hold on to this share [in Europe] as demand [for gas] rises into next winter, whereas overall US LNG production is only growing with yet more new capacity coming to the global market by the end of the year,” he added.

The transit agreement between Ukraine and Russia also comes to an end this year, putting at risk flows through the route.

Column chart of Europe's gas supplies by source, showing Russia's share of Europe's gas supply slumped in 2022 but has risen recently

The European Commission is supporting efforts to establish an investment plan to expand the capacity of pipelines in the Southern Gas Corridor between the EU and Azerbaijan.

A senior EU official said supplies through the route were not currently sufficient to replace the 14bn cubic metres of Russian gas that currently flowed through Ukraine to the EU each year.

The EU’s energy commissioner Kadri Simson said she had raised concerns about LNG being diverted from Europe to meet demand in Asia on a trip to Japan this month.

She said Tokyo and Brussels had established an “early warning system” to monitor LNG shortages and had agreed both should pursue energy saving measures.

“The EU is prepared to buffer any negative supply or demand events in global gas markets,” she added. “Our gas storage remains at record high levels [and] our gas demand stabilised at record low levels, down 20 per cent compared with 2021.”

Caliber.Az