Russia has become the second-largest supplier of liquefied natural gas (LNG) to Europe. Currently, LNG makes up 40% of Russia’s gas exports to the EU, with its value surging by 150% over the past three years, RIA Novosti reports.
In Q3 2024, the share of Russian LNG in Europe increased by 20%, according to Eurostat. This growth is attributed to seasonal factors and anticipation of rising gas prices following Ukraine’s failure to renew its gas transit agreement with Russia via Sudzha (Kursk Region), set to expire at the start of 2025. However, despite increased supplies, gas storage facilities are depleting faster than they can be replenished, notes Igor Rastorguyev, lead analyst at AMarkets.
The future of Russian LNG exports to Europe remains uncertain, as these dynamics are driven not by market forces but by geopolitical factors and decisions made by a limited group of individuals, Igor Rastorguyev adds.
“It’s less about prospects and more about answering a key question: can Europe survive without Russian gas (both pipeline and LNG)? The answer is yes, but only at the cost of significant strain on its economy,” the analyst highlights.
From an economic standpoint, the relationship is mutually beneficial. Gas from Russia remains more affordable for Europe due to established infrastructure and the relatively short transportation distance, whether delivered via pipeline or as LNG.
Secondly, without Russian supplies, Europe’s reliance on providers from the U.S. and the Middle East will increase, expanding the number of regions capable of dictating terms to the EU. Furthermore, Europe cannot be certain these suppliers will meet the full demand. The U.S. has already hinted that the Asian market is more lucrative and therefore a higher priority than Europe. Additionally, a growing dependence on LNG introduces less predictability and stability compared to the long-term contracts previously established with Russia. Relying on the spot market for gas invariably leads to higher costs.
Thirdly, the rhetoric of European politicians advocating for diversification through green energy reveals a clear element of self-deception.
“At present, there is no more cost-effective alternative to gas, particularly given the context of declining living standards and rising energy prices. The lofty declarations conveniently omit the significant expenses associated with developing green energy. It’s merely a propaganda tool,” Igor Rastorguyev believes.