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But what about Russian gas?
But questions around Russian gas continue to influence the overall picture.
Russia is far from the behemoth it once was in terms of EU gas supply. The share of Russian pipeline gas imported by member states fell from 40% of the total in 2021, to about 9% in 2023. However, according to recent CREA data, a rise in Russian liquefied natural gas (LNG) into the bloc means it still accounts for 18% of the EU’s total gas imports, an increase of almost 5% from 2023.
Ultimately, Russian pipeline gas deliveries to the bloc appear to be coming to the end. Austria, one of the last European countries still receiving pipeline gas from Russia, finally stopped receiving the hydrocarbon after a legal dispute with Gazprom, the state-owned Russian gas company.
While Slovakia and Hungary still receive Russian pipeline gas, all indications suggest the arrangement will run out at the end of 2024. The five-year gas transit deal involving Gazprom and Ukrainian state company Naftogaz for the transit of Russian gas across Ukrainian territory expires at the end of the year and Kyiv says it will not renew it.
Although the TurkStream pipeline will still supply Hungary, the end of flows via Ukraine will put pressure on central European countries to find an alternative supply.
Ukraine is not expected to renew its gas transit deal with Russia at the end of 2024Image: Maxim Shipenkov/epa/dpa/picture-alliance
Borys Dodonov, head of the Center for Energy and Climate Studies at the Kyiv School of Economics, expects the gas transit deal to end because, “Ukraine has no economic rationale to renew this contract.”
In an interview with DW, Dodonov pointed to the possibility of some kind of alternative deal being done instead. “We cannot exclude any hidden agreements, or corruption,” he said, and added that the EU itself could lobby to keep the gas flowing in order to avoid potential shortages in countries such as Slovakia and Hungary.
Remarkably, despite everything that has happened in the last three years, the EU remains Russia’s biggest customer for both pipeline gas and LNG. In October, the EU bought 49% of all Russia’s LNG exports and 40% of all its pipeline gas exports.
Could LNG ultimately solve the problem?
Since Russian pipeline gas to Europe was largely cut off in 2022, LNG has become more important for both parties. Russian LNG volumes into the bloc have increased by close to 15% so far this year.
Dodonov insists that Europe does not need any Russian gas to meet its energy needs, including LNG, due to new LNG capacity coming from the US. He expects incoming US President Donald Trump to increase LNG output and thinks Europe could be primed for a major gas trade deal with the country.
Ed Cox, head of global LNG at independent commodity data provider ICIS, notes that LNG now accounts for 34% of Europe’s total gas share since the invasion in 2022, double what it was prior. The pivot to LNG means Europe is now more vulnerable to global price pressures. “Europe is more connected to fundamentals in a global market than ever before,” he told DW, even though overall European demand for gas had fallen by around 20% from the pre-invasion period due to high prices, warmer-than-expected weather and increased renewable capacity.
Although Europe imports more LNG than before 2022, volumes have fallen recentlyImage: Stefan Sauer/dpa/picture alliance
Cox believes that in the event of a cold winter and an end to the Ukraine transit deal, Europe will still be able to meet its gas needs with LNG. However it will come at the risk of much higher prices as supply won’t be dramatically increased in the short term. “Europe will get enough LNG if it needs it. But it might mean that European prices have to go higher to compete with Asian demand.”
Higher prices for gas to replenish stocks after the winter, he added, would have a knock-on effect heading for the winter of 2025 and beyond. “It’s not about whether we have enough LNG or gas, it’s really about the price implications.”
Edited by: Uwe Hessler
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Publish date : 2024-12-02 06:34:00
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