(Bloomberg) -- Russia’s role in the European Union’s liquefied natural gas market is growing, even as the bloc weighs how to clamp down on supplies from the nation.
Moscow’s share of the EU’s LNG imports climbed to 20% in the first half of the year, compared with 14% a year earlier, according to a report from the Agency for the Cooperation of Energy Regulators, the bloc’s energy watchdog.
The growth highlights Europe’s energy balance more than two years after the Kremlin’s invasion of Ukraine sparked an unprecedented supply crisis. While Russia is no longer the EU’s top gas provider — most pipeline links have now been halted or severed — LNG from the nation remains a vital piece of Europe’s energy security.
In the third quarter, the EU’s total imports of the super-chilled fuel dropped to the lowest since 2021, meaning Russia’s growing share comes as part of a smaller pie. US-origin LNG held steady at around 45% during the period, while Qatar’s share slipped to 12%, according to the report.
Qatari LNG has favored Asia as tankers have avoided transit through the Red Sea, due to Houthi militant attacks on commercial vessels. The shift in trade flows has also allowed for more Russian LNG into the European market.
The EU is now trying to figure out how to reduce its reliance on Russian gas, even as supplies continue to flow into the region. A transit agreement for pipeline flows across Ukraine expires at the end of the year, and officials are exploring ways to replace those supplies. Earlier this year the bloc for the first time agreed to impose limited sanctions on Russian LNG.
France and Belgium — whose ports still take in significant amounts of the Russian fuel — have both called for tougher monitoring. The European Commission, the bloc’s executive, has yet to put forward an action plan for how to accelerate the phase-out.
The EU’s gas demand in the first eight months of the year continued to fall compared to 2023, according to ACER’s 2024 market-monitoring report. A drop in power-sector use offset a small increase in industrial demand.
Its share of the global LNG-import market shrank to 18% in the third quarter, compared to 24% the year prior. Europe’s gas market is relatively balanced, and the region’s buyers have shied away from competing for higher priced spot cargoes, the study said.
--With assistance from Anna Shiryaevskaya.
©2024 Bloomberg L.P.