Imports of Russian liquified natural gas (LNG) remain a source of energy security for the EU and should only be reduced in “gradual steps” to avoid disruptions in supply, an EU watchdog warned.
The advice was published in a report today (April 19) by ACER, the EU agency for the cooperation of energy regulators, offering analysis on European LNG market developments, which noted that the EU imported 18 billion cubic metres (bcm) of Russian LNG in 2023 via the Yamal pipeline, mostly through long-term supply agreements signed before 2022.
The report flagged that increasing EU reliance on Russian LNG coincided with the diminishing role of EU domestic production. The EU energy watchdog placed Europe as the largest source of LNG demand (57 bcm) compared to 2021, accounting for more than a quarter of the total LNG trade. Currently, Russia is the second-biggest LNG supplier, after the US.
“Romania, Denmark, the Netherlands and Germany stand out as the largest EU conventional gas producers. However, the declining production and the closure of the Dutch Groningen field, together with the UK production not being accounted as part of EU production, has reduced EU’s domestic gas production significantly,” the report ran.
ACER’s report referred to existing EU laws allowing EU countries to temporarily restrict gas supplies, including LNG from Russia and Belarus. However, it recalled that substantial volumes have already been contracted under long-term LNG agreements before the Russian invasion of Ukraine.
“Reductions in Russian LNG imports should be approached with caution, particularly in light of the imminent expiration of the ship-or-pay transit contract for gas pipeline supply from Russia to Europe via Ukraine by the end of 2024,” read the report.
While pipeline gas imports from Russia to the EU dropped significantly in 2023, down 84% compared to 2021, Russia remains a major supplier of LNG to Europe, with the percentage of LNG supply relative to total EU gas imports surpassing 40% in 2023, according to ACEA. Among the EU countries supplied are Belgium, France, Italy, the Netherlands, Portugal, and Spain, ACER’s report revealed.
"If Europe is still importing LNG from Russia, it is because there is a need," a France-based gas trader told S&P Global. "With our other main suppliers, such as Norway, operating at maximum capacity, it will be hard to completely stop the flow of Russian LNG. We are still not completely out of the crisis."
