Alternatives to Russian Gas Supplies: Is LNG the EU’s Silver Bullet?

On February 27, speaking at the extraordinary assembly in the Bundestag, Chancellor Olaf Scholz stated that Germany is planning to build two liquefied natural gas (LNG) terminals, in Brunsbüttel and Wilhelmshaven (RIA Novosti, February 27), which would help decrease the country’s reliance on Russian natural gas. According to Robert Habeck, the federal minister for economic affairs and climate action, the Russian share of Germany’s gas consumption is 55 percent (News.mail.ru, February 27). While the United States has long been warning the European Union of the risks associated with overarching dependency on Russian energy supplies (Vedomosti, April 4, 2014), the latest German decision was undoubtedly motivated by Russia’s large-scale military aggression again Ukraine launched at the end of February (Pravda.ru, February 22).

Earlier, European Commission President Ursula Gertrud von der Leyen called the EU’s heavy dependency on Russian hydrocarbons a serious threat. She also argued that to overcome this dangerous situation, Europe must increase LNG imports from other, “more reliable” suppliers (RIA Novosti, February 25).

In terms of diversifying away from Russian natural gas, the EU could turn to several other options. These include pipeline projects, such as the Southern Gas Corridor (see EDM, February 23) or the Mid-Catalonia Pipeline (MidCat—a Spanish-French interconnector) (Lavanguardia, February 6), that would transport non-Russian sources of gas to the continent. However, supplies of LNG from further afield could also become an important element of Europe’s gas diversification strategy.

Realistically, when it comes to LNG imports, the EU can seriously consider five main directions:

First, is the US—one of the world’s leaders in terms of liquefied natural gas production—whose LNG exports to the EU in 2021 alone stood at 22 billion cubic meters (bcm) (1prime.ru, February 17). This does not represent a maximum peak: according to Russian sources, the US is now actively working with its European partners to boost those volumes even higher (TASS, February 21).

That said, for a number of reasons, the EU remains a secondary target for US LNG exporters—Asia is a key priority, strictly commercially speaking. To grow the North American LNG “vector” further, the EU could start negotiations with Canada, which itself sits on massive natural gas reserves. But this possibility would require additional infrastructure-related investments as well as new legislative procedures. Still, even a further increase in LNG supplies from the US (and potentially Canada) will not be enough to cover the EU’s total demand for natural gas, whose annual cumulative consumption stands at 350–400 bcm (Nezavisimaya Gazeta, January 23).

A second major non-Russian supplier with growing global ambitions is Qatar. Doha voiced plans to ultimately increase Qatari LNG production on February 22, during the summit of the Gas Exporting Countries Forum (GECF) (Neftegaz.ru, June 24, 2021). As argued by Russian sources, however, this Middle Eastern emirate presently lacks sufficient production capacity to dramatically augment its exports to the EU (Neftegaz.ru, October 12, 2021). But other commentators report that the ostensible lack of export capacity primarily stems from politics. According to “unofficial sources,” Qatar is reportedly ready to increase LNG exports to the EU only if Brussels fulfills certain conditions. First, the EU will apparently have to opt into long-term contracts. And second, Brussels will need to drop its anti-monopoly investigation launched earlier against QatarEnergy (which was actually put to a halt in mid-February) (Neftegaz.ru, February 14, 2022). Officially, however, Qatari authorities keep reiterating that current production capacities cannot be significantly increased.

A third large-scale global supplier of LNG—Australia—has already voiced its readiness to begin exports to the EU, should problems develop with Russian supplies (Rueconomics.ru, accessed March 6). In 2021, Australia became the world’s leading LNG producer (Neftegaz.ru, January 11). For Canberra, strengthening energy ties with the EU could also become a good opportunity to diversify its exports away from China, with which political and economic ties have significantly deteriorated—and particularly in light of rumors that Beijing might seek to use Australia’s export dependency on China to its advantage.

In addition to the above-mentioned sources, the EU could also look to the African continent. There, the first option could be gas-endowed Algeria, which in 2021, delivered approximately 34 bcm of natural gas to the EU and, reportedly, could boost those exports by another 7 bcm (Rosbalt, January 31). However, a further increase in output would require some serious investments in the local gas infrastructure and readiness by the Europeans to compete with China, which signed a contract in February 2022 on building a new LNG terminal in the country (Rossaprimavera.ru, February 21). The other problem to resolve is Algeria’s conflict with Morocco. Since November 2021, Algeria shut down its gas export pipeline to Spain, Maghreb–Europe (MGE), which passes through Moroccan territory (Vedomosti, November 1, 2021).

In addition to Algeria, the European bloc could also expand cooperation with Angola, Tanzania, Nigeria and Mozambique (Gidnenuzen.ru, May 12, 2021). Yet the ability to fully capitalize on these opportunities will again be hampered by a lack of infrastructure (which will require large investments), in addition to serious political and security risks (terrorism and civil wars) that these countries are facing.

A fifth vector for the EU to consider may be LNG supplies from the Eastern Mediterranean (1prime.ru, February 2). Here, the best options for the EU include Israel, with its reported 900 bcm of offshore natural gas deposits (EADaily, October 4, 2021), as well as Lebanon and Cyprus. But disputed claims over many of those Mediterranean reserves, including with the ambitious involvement of Turkey, continue to make this a serious challenge (see EDM, October 1, 2020).

In sum, while overcoming Europe’s dependency on Russian natural gas will not be easy, the bloc has multiple options that it can pursue, if it can find the political and financial will to bring them to fruition. One of Russia’s leading energy experts, Mikhail Krutikhin, recently admitted that the EU’s ability to wean itself off of Russian gas should not be underestimated. Specifically, he noted that Western European countries such as France, Germany, Italy, Spain and Portugal could all “easily survive without Russian natural gas even during the most challenging winter period.” In contrast, most of the countries in Central and East Europe have still not done enough to diminish their dependence on Russian energy (Rosbalt, February 2). But even there, the long-term trends look to be against Gazprom. Although some regional states, like Hungary and Serbia (see EDM, February 7, March 2), have cultivated this dependency, Poland has declared its readiness to forgo Russian gas supplies entirely—and it is cooperating with its neighboring allies to ensure their energy security is bolstered as well (see EDM, March 7).