Europe’s LNG Pivot: Energy, Markets & Geopolitics

The EU is shifting towards LNG in response to declining Russian imports, but the strategy presents new challenges.

Following and due to both the reduction of gas flows arriving from Russia starting in the winter of 2021 and the invasion of Ukraine by Russia in February 2022, Europe has set itself the difficult task of drastically reducing imports of Russian gas by replacing it with a series of alternatives (demand reduction, renewables, Natural Gas imported from friendly countries through both existing and timely pipelines and regasification terminals), each of which has both economic and geopolitical implications, which are going in fact to change balances and relationships consolidated for several decades and that seemed so far immutable.

The Ukraine-Russia war highlighted the uncomfortable reality of Europe's historical dependence on Russian gas. Before the war, Russian gas flows to Europe accounted for about 45% of EU gas imports (155 billion cubic meters out of a total of 360 cubic meters). Natural gas is also deeply rooted in the economies of the European Union as it accounts for 23% of primary energy consumption (but 51% in Italy and less than 10% in Poland).

Disruption in European Gas Prices

However, the decision to diversify…