The ongoing Russia-Ukraine conflict is causing Europe to witness a changing energy landscape. A group of European Union (EU) countries is advocating for stricter regulations on Russian liquid natural gas (LNG) imports, potentially affecting energy supplies in Central and Eastern European nations. These efforts come as the EU aims to decrease its reliance on Russian energy due to tensions with Moscow over the conflict. The proposed regulations would entail more detailed reporting on Russian LNG in storage and reloaded cargoes. While the goal is to reduce dependence on Russian energy, these measures could pose challenges for landlocked countries in Central and Eastern Europe that have limited alternatives to Russian gas.
As liquid natural gas imports increase, a former senior EU official believes that Europe’s era of depending on Russian gas pipelines is diminishing. However, critics argue that some landlocked nations like Hungary are being pressured to move away from Russian gas too swiftly. With sanctions on LNG imports by sea potentially tightening fuel supplies for these landlocked countries, costs could rise. Currently, although Russian oil imports are largely banned in the EU, there are no EU-wide sanctions on purchasing Russian gas. The European Commission has encouraged member states to reduce imports to avoid funding the Kremlin’s activities.
The EU has implemented targeted measures, such as prohibiting the transfer of Russian LNG between ships in European ports for further delivery, set to take effect in 2025. France and the Baltic states have urged the EU to adopt even stronger reporting rules, necessitating storage operators to disclose information on the origin and portion of Russian LNG in reloaded cargoes.
The evolving energy landscape in Europe is driven by both practical supply needs and geopolitical pressures. The International Energy Agency predicts a surge in global natural gas demand in 2024 and 2025, alongside limited growth in LNG production. The future of gas supplies via the Ukraine-Russia pipeline is a significant uncertainty for Europe during the winter. Despite the conflict, gas continues to flow through Ukraine from Russia, but a major contract governing transit will end on January 1, 2025.
EU data shows a decline in Russia’s share of pipeline gas imports, from over 40% in 2021 to around 8% in 2023. When considering both pipeline and LNG, Russia accounted for only 15% of total EU gas imports in 2023. However, the transition away from Russian gas poses challenges for landlocked countries such as Austria, Slovakia, and Hungary, which have heavily relied on Russian pipeline gas. If not carefully planned, switching to LNG could result in more expensive contracts compared to Moscow’s pipeline gas.
Yann Caspar, a researcher, highlights a disparity in how coastal countries like France, Spain, and Belgium continue to purchase Russian LNG while landlocked nations are urged to seek alternatives. He emphasizes the need for a realistic approach to energy policy, warning against imposing ideological frameworks on energy-related decisions.
Caspar expressed concern, stating, “This is very dangerous.” He recognized the importance of diversification but raised doubts about its feasibility for landlocked countries like Hungary. “For a small country without access to the sea, it’s not feasible in the short term to make drastic changes,” Caspar explained.
Last month, Csaba Marosvari, Hungary’s deputy state secretary for energy security, criticized the EU for not offering enough support to shift away from Russian natural gas. He highlighted the challenges faced by small countries in the region, citing limited market players, lack of capital, and high costs for infrastructure projects. Marosvari emphasized that the focus on financing green energy initiatives has left some nations without the necessary assistance for diversification.
Samuel Furfari, a former senior official at the EU’s Energy Directorate-General, referred to liquid natural gas as “the energy changer.” He mentioned that the current situation would encourage new supplier countries as gas pipelines are no longer the only transportation option. Furfari expressed skepticism about future energy predictions, especially in light of unexpected events like the Nord Stream pipeline explosions in September 2022.
Regarding the future of the energy sector, Furfari cautioned against overly optimistic views of decarbonization. He highlighted the need to balance freedom, well-being, and climate change efforts. Despite uncertainties, Furfari emphasized the complexity of these factors.
In response to inquiries, an EU Commission spokesperson referred to a recent meeting among EU Energy ministers focusing on affordable energy costs, competitiveness, decarbonization, and energy security. The spokesperson underscored the importance of balancing these objectives.
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