By Asif Aydinli
The European Union continues to face significant challenges in its efforts to reduce dependency on Russian gas. Despite ambitious plans, such as the REPowerEU project, aimed at completely ending Russian gas imports by 2027, the energy market suggests that accomplishing this goal will be extremely difficult. The main issue lies in the fact that Russian gas continues to flow into Europe, and in some cases, the region’s reliance on these supplies is even increasing, threatening the EU’s long-term energy security strategies.
In its report, Bloomberg expresses deep concern about the EU’s ongoing dependence on both pipeline and liquefied natural gas (LNG) from Russia . Contrary to the EU’s plans to phase out Russian gas by 2027, supply volumes have stopped declining, and instead, reliance has even slightly grown. Since the beginning of 2024, Russian gas supplies accounted for about 20% of the EU’s total gas imports, compared to 14.8% in 2023 (for comparison, it was 44.9% in 2021). Further reducing gas demand in Europe is becoming increasingly difficult: industrial consumption is at record lows, which is costly for the region and could cause irreversible damage to production activity.
One of the key reasons for the continued reliance on Russian gas is the existing infrastructure, which is hard to replace. Gas continues to be delivered via three main routes: through Ukraine to Slovakia, through Turkey to Bulgaria, and as liquefied natural gas (LNG). The Ukrainian pipeline plays an important role for Central and Eastern European countries such as Slovakia and Austria, as well as Italy, the Czech Republic, and Hungary. Simultaneously, LNG imports, including through Spain, persist.
The European Commission has repeatedly stressed the need to reduce Russian gas imports to support the REPowerEU plan. EU Energy Commissioner Kadri Simson, who is soon leaving her post, expressed concern about the growing dependence on Russian gas and urged EU countries not to increase imports. However, recent trends suggest that supply volumes may exceed last year’s figures, casting doubt on the feasibility of achieving 2024 goals.
A critical moment will come on January 1, 2025, when the transit contract for the Ukrainian route expires. It remains unclear how the EU and Russia plan to proceed and what agreements may be reached. If gas transit through Ukraine is halted, it will pose additional challenges for European countries accustomed to receiving Russian gas via this route. The scenario in which the European Union can entirely do without Ukrainian transit seems unlikely, despite Kadri Simson’s statement that the EU can live without Russian gas. Replacing Russian volumes with supplies from the U.S., Qatar, Australia, or Nigeria will inevitably lead to higher fuel prices, putting pressure on the economy and households.
The reduction in gas demand in Europe has been ongoing for the third consecutive year, and this trend began even before geopolitical tensions intensified. In the fall of 2021, amidst a sharp rise in prices and a supply-demand imbalance, gas demand started to decline. The desire to abandon long-term contracts and shift to exchange-traded pricing did not help secure sufficient supply volumes at acceptable prices. The situation worsened in 2022 due to a sharp price spike following the outbreak of conflict in Ukraine and the subsequent destruction of the Nord Stream 1 pipeline.
The REPowerEU plans, adopted in the spring of 2022, outlined the phase-out of Russian gas by 2027, but these initiatives are not yet mandatory. European Commission President Ursula von der Leyen has tasked the new Commission with developing a concrete action plan to strengthen Europe’s energy independence. However, despite the seriousness of the intentions, the actual implementation of the set goals remains in question.
The main obstacle to achieving energy independence is the high cost of transitioning to alternative sources. LNG imports from the U.S. or the Middle East require significant investments in infrastructure, including the construction of new terminals and the modernization of transport routes. Moreover, political and economic instability in supplier countries could pose additional risks to supply reliability. The example of the sharp rise in gas prices in 2021 clearly demonstrated that an attempt to switch to market pricing makes the region vulnerable to price spikes, especially felt during the winter months.
Given the current challenges, it becomes evident that the attempt to completely abandon Russian gas by 2027 appears ambitious but unlikely to be achievable under the existing conditions. Europe may continue reducing its dependence, but there are no quick and easy solutions here. The issue is not only about political will but also about economic realities, which dictate their own rules. In the end, European countries will have to strike a balance between energy independence and resource affordability, which means that Russia, despite all the sanctions and political pressure, will remain a significant player in the energy market for the foreseeable future.