After 2 years of drought, Russia overtook US as biggest LNG supplier to Europe in May

While Russia continues to navigate through the host of sanctions imposed by Ukraine and Western allies, Europe’s gas imports from Russia overtook supplies from the US. This was the first time Russia overtook the US to be the biggest gas supplier in Europe in almost two years.

The reversal which took place in May indicates the difficulty of reducing Europe’s dependence on gas from Russia, with several eastern European countries still relying on imports from their neighbour.

“It’s striking to see the market share of Russian gas and [liquefied natural gas] inch higher in Europe after all we have been through, and all the efforts made to decouple and de-risk energy supply,” Tom Marzec-Manser, head of gas analytics at consultancy ICIS, told Financial Times.

Russia navigating through sanctions

Immediately after Russia unleashed a full-scale invasion in Ukraine in February 2022, it slashed its pipeline gas supplies to Europe and the region stepped up imports of LNG with the US as a major provider.

With all the sanctions and Moscow’s reactions to those sanctions, the United States overtook Russia as a supplier of gas to Europe in September 2022 and has since 2023 accounted for about a fifth of the region’s LNG supply.

However, last month, Russian-piped gas and LNG shipments accounted for 15 per cent of total supply to the EU, UK, Switzerland, Serbia, Bosnia and Herzegovina and North Macedonia, according to data from ICIS.

Meanwhile, LNG from the United States made up to 14 per cent of supply to the region, marking its lowest since August 2022.

Why this change? 

According to ICIS, the reversal came amid a general uptick in European imports of Russian LNG. It is important to note that Russia still continues to provide supplies to Europe via pipelines through Ukraine and Turkey.

Flows in May were also affected by several one-time factors including an outage at a major US LNG export facility, while Russia continued to send more gas through Turkey ahead of planned maintenance in June.

However, ICIS’s Marzec-Manser said that the reversal was “not likely to last”. Later this year, Russia will be able to ship LNG to Asia via its Northern Sea Route. It is expected that it will likely reduce the amount sent to Europe, while US LNG production has picked up again.

“Russia has limited flexibility to hold on to this share [in Europe] as demand [for gas] rises into next winter, whereas overall US LNG production is only growing with yet more new capacity coming to the global market by the end of the year,” Manser explained.

Another noteworthy factor is the transit agreement between Ukraine and Russia also comes to an end this year, putting at risk flows through the route.

With inputs from agencies.