Europe buys more gas, but the competition to replace Russia is far from done

• While governments scramble to get more liquefied natural gas (LNG) to keep up with a quick move away from reliance on Russian fuel, Europe faces a dangerous winter even if its gas storage can be filled.
• As a result, governments will need to maintain rationing plans on hand.
• By 2027, the European Union wants to stop using Russian fossil resources.

While governments scramble to get more liquefied natural gas (LNG) to keep up with a quick move away from reliance on Russian fuel, Europe faces a dangerous winter even if its gas storage can be filled. As a result, governments will need to maintain rationing plans on hand.

Meanwhile, there is little relief for European households from the exorbitant fuel costs that have squeezed budgets, reduced disposable income, and weighed on the outlook for the economy.

By 2027, the European Union wants to stop using Russian fossil resources. But after they all refused a Kremlin demand to switch to rouble payments, Moscow already cut off gas deliveries to Bulgaria, Poland, Finland, Danish supplier Orsted, Dutch company Gasterra, and Shell for its German contracts.

In order to get through the winter, when stored gas typically only fulfils about a quarter of demand, the 27-member European Union, which has historically relied on Russia for 40% of its gas needs, plans to have its gas storage 80 percent filled by November from around half full presently. Analysts claim that it is on course.

Read more: Ukraine says Severodonetsk is not cut off, Despite Russian attacks

Although Moscow claims it is fulfilling its responsibilities and sees no need to stop shipments to other customers, it still leaves a sizable vacuum that must be filled from other sources, such as LNG, and it will grow much larger if Russia reduces flows to more European purchasers.

“A complete halt to Russian flows would undoubtedly be Europe’s worst-case scenario for this winter as the continent is unlikely to be able to source sufficient supplies from other producers to offset such a significant supply disruption,” said Leon Izbicki, European natural gas associate at Energy Aspects.

Demand for gas had been rising in the post-pandemic recovery even before Russia’s invasion of Ukraine in February, which brought on an energy crisis in Europe. It was already crowded as a drum on the LNG market, which is controlled by long-term contracts.

As more capacity came online in the United States and high prices in Europe attracted cargoes, the EU increased its LNG purchases, with imports rising by nearly 58 percent in the first five months of 2022 compared to levels in 2021, according to data from Retinitis.

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