For decades, Europe’s energy landscape has been tightly tied to its reliance on imported natural gas, with Russia historically serving as its primary supplier. Since the early 2000s, Russia has cemented its dominance in the European gas market, leveraging its extensive pipeline network to deliver gas to industries and households across the continent.
However, Russia’s military actions have triggered a seismic shift in European energy strategy. The wave of sanctions imposed on Russia in response to its special military operation in Ukraine has forced the European Union to urgently seek alternatives, aiming to reduce its dependence on Russian gas, long viewed as a fixture of Europe’s energy security.
In this context, liquefied natural gas (LNG) has quickly risen in importance and interest. Unlike pipeline gas, LNG can be shipped across enormous distances, offering a level of flexibility that traditional pipelines just cannot. This logistical advantage has transformed LNG into a new fundamental component in Europe’s strategy to diversify its energy sources, allowing the Old Continent to secure new supplies from regions that were previously unreachable.
Europe’s reliance on Russian gas and the rise of LNG
For much of the 21st century, European energy security has been intricately tied to Russian natural gas. In 2021, more than 45% of the EU’s gas imports came from Russia, delivered primarily through a network of pipelines. This arrangement had long been seen as mutually beneficial: Europe received gas at relatively affordable prices, while Russia’s economy, heavily reliant on fossil fuel exports, thrived (roughly one-fifth of Russia’s GDP has consistently been driven by oil and natural gas exports since the ?early 2000s).
However, the landscape shifted dramatically after Russia’s Special Military Operation in Ukraine in February 2022. Faced with the need to reduce reliance on Russian energy, liquefied natural gas (LNG) emerged as a new essential element of Europe’s energy diversification strategy. LNG offers an obvious advantage, compared to “traditional” gas: natural gas can be liquefied at extremely low temperatures, transported over long distances by tanker and “regasified” at ports equipped with specialised infrastructure. Thanks to this capability, Europe can now benefit from gas supplies coming from regions previously inaccessible via pipeline, including the United States, Gulf States and North Africa.
Gas prices in Europe, as a consequence of the events taking place in Eastern Europe, “reached levels more than ten times higher than the average prices in the previous 15 years” in the second half of 2022. This unprecedented increase has had a severe impact on European economies, with businesses facing rising operational costs and reduced profits.
In recent years, several European countries have dramatically increased their LNG processing capabilities, with the largest expansions seen in Germany – the continent’s historical leader in Russian gas consumption – alongside the Netherlands, Italy, France and Finland. Globally, the United States and Qatar have risen as dominant exporters of liquefied natural gas, with the U.S. becoming the European Union’s primary LNG supplier as early as 2022.
The Norwegian Arctic drives the European LNG market
The Arctic, particularly Norway, has also become a focal point for the European LNG market. Norway has reinforced its role as a key supplier, with fields located far beyond the Arctic Circle already heavily utilised for natural gas extraction.[SE1] [TB2] These fields are complemented by onshore facilities that transform gas into ready-to-export LNG. One outstanding example is the Hammerfest LNG plant on Melkøya Island, one of the world’s northernmost processing facilities. Operational since 2007, it receives natural gas from the Snøhvit field in the Barents Sea, transported via a 143-kilometre pipeline.
Unlike other regions, Norway is viewed by European political authorities as a particularly reliable partner, largely due to its political and economic stability. This perception has led EU countries to place significant trust in Norway as a key LNG supplier. The decision has proven wise, and Norway has been increasing its production, becoming the most important single supplier of LNG to Europe since 2022.
The United Kingdom, despite lacking substantial gas reserves of its own, has also taken advantage of Europe’s shifting energy dynamics, establishing itself as a crucial hub for LNG distribution. Its strategic location and collection of specialised ports allow the UK to import massive volumes of LNG from allies, notably Norway and the United States, and redistribute it across Europe. The country is home to Europe’s two largest LNG terminals – South Hook LNG in Wales and Grain LNG not too far from London – strengthening its role as a key player in the continent’s energy infrastructure.
A still unescapable partnership
Despite the rapid growth of LNG imports to Europe and new suppliers consolidating their positions, Russia continues to play a significant role in Europe’s energy landscape. The EU has not yet succeeded in fully eliminating Russian gas from its energy mix, as several member States still import Russian gas via pipelines that bypass Ukraine, such as TurkStream, setting off debates over the true effectiveness of sanctions.
The resilience of Russian exports is still noteworthy: Europe’s five largest importers continue to pay Moscow between 1 and 2 billion euros per month for fossil fuel purchases. This highlights that, despite the EU’s efforts towards diversifying energy sources, Russian gas remains an indispensable component of the Old Continent’s energy portfolio.
While LNG and new suppliers, particularly the United States, have allowed Europe to reduce its reliance on Russia, the transition remains incomplete. Despite increased LNG exports from the US, the European market has not been fully filled. Furthermore, the flow of American liquefied gas to Europe has not been stable. Demand in Asia has been increasing, and the United States is concerned about losing its position as the world's leading LNG exporter to Australia and Qatar, which are, geographically, much closer to larger buyers. Moreover, Russia is expanding its own LNG production, with the world’s largest LNG plant, Yamal LNG, located at the heart of the Russian Arctic. The historical ties that bind Europe’s energy needs to Russian gas will be hard to cut, suggesting that a complete break from this partnership remains a very distant prospect.
Tommaso Bontempi
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