Analysis: while Europe has moved away from Russia's pipeline gas, it will still remain exposed to the volatility of global gas marketsRussia's invasion of Ukraine imposed a sudden energy shock on Europe 18 months ago. Faced with the prospect of much less Russian gas, there were fears that Europe's energy infrastructure would not cope with winter 2022-23, causing economies to crumble.
LNG's total share of EU gas imports rose from 19% in 2021 to around 39% in 2022, amid a rapid upgrade to infrastructure that aims to have grown LNG capacity by one-third between 2021 and 2024. Indeed, 13% of LNG imports into the EU actually still come from Russia, whose shipments have also significantly increased since the invasion.
As for pipeline gas, Norway has overtaken Russia to become Europe's leading supplier, providing 46% of the requirement in early 2023 . This extra load has strained Norway's gas infrastructure. In May and June, delayed maintenance work caused sluggish flows that drove up prices, again showing how tight the European market is at present. Extended maintenance work in Norway leading to more obstructions in future looks distinctly possible.
As part of the pivot away from Russia, the EU managed to reduce gas consumption by 13% in 2022, according to the International Energy Agency . In the months ahead, war-weary EU states may not do so well on this front. The good news is that pressure on gas should at least subside from the mid-2020s. Significant new supplies of LNG will come online in the US and Qatar and the market will re-balance. European gas demand should also get significantly lower – down 40% by 2030, according to the energy reduction plan.