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ussia’s invasion of Ukraine and the conflict that followed it have profoundly reshaped the European gas market. To replace Russian pipeline gas, EU countries nearly doubled their LNG imports, relying on the inherent flexibility of this supply. But the reconfiguration has come at a steep cost.

Looking ahead, the EU is entering a new strategic phase. It aims to end Russian gas imports by end-2027, but must do so while securing affordable supplies for consumers and confronting major uncertainties over future demand. All this unfolds against a backdrop of intensifying geopolitical tensions, with U.S. President Trump pressing Europe to buy more American LNG and oil, and Qatar threatening to cut off LNG deliveries altogether.

 

 

The moving picture of LNG imports requirements

 

Before 2022, the EU was not seen as a major or growing LNG consumer, that distinction went to developing Asia. In 2019, EU LNG imports peaked at 90 bcm, compared with Japan’s 105 bcm. The EU Green Deal that same year, followed by the Fit for 55 Package in 2021, signaled a long-term decline in European gas demand.

EU LNG imports jumped by 50 bcm in 2022 to offset the steep drop in Russian pipeline supplies, which fell by about 80 bcm that year. From 2022 to 2024, LNG imports held between 110 and 135 bcm, including roughly 20 bcm from Russia, while pipeline deliveries from Russia shrank further to around 30 bcm in 2024. As a result, LNG’s share of EU gas consumption rose from a marginal 20 percent in 2021 to 35 percent in 2024, peaking at about 40 percent in 2023.

There is sharp disagreement over how much LNG Europe will need in the medium and long term, and this uncertainty is shaping both corporate contracting strategies and the European Commission’s position. The first unknown is future gas demand: beyond the 17 percent decline from 2017–2021 pre-crisis levels, ACER estimates the Fit-for-55 target requires a further 16 percent cut between 2024 and 2030. Yet other outlooks, such as S&P Global’s, project a rebound in industrial and power-sector demand by 2030. Beyond that, the picture is murkier still, as Europe has yet to settle on a 2040 emissions-reduction goal.

 

 

The second source of uncertainty concerns LNG’s role in Europe’s future supply mix. Imports will hinge on the trajectory of other sources—domestic production, biomethane, and deliveries from Norway, North Africa, and Azerbaijan—as well as, above all, the fate of Russian pipeline gas. High prices have fueled calls for Russian flows to return in hopes of cheaper energy, though the idea of “cheap” Russian gas is more myth than reality. At the same time, the European Commission has set a goal of phasing out Russian gas entirely by 2027, a plan facing legal and political resistance from Hungary and Slovakia.

 

 

A boom in LNG import Infrastructure

At the start of 2022, EU LNG regasification capacity stood at 170 bcm, then thought sufficient to meet future import needs. But as Russian pipeline supplies collapsed, the distribution of that capacity proved inadequate: 75 bcm sat in Iberia, which imported only about 25 bcm. Most critically, Germany—the EU’s largest gas market—had no domestic LNG import facilities despite its heavy reliance on Russian gas. Between 2022 and 2024, the EU added 70 bcm of capacity, concentrated in Northern Europe, Italy, and Southeast Europe, largely via floating storage and regasification units (FSRUs) that can be withdrawn once LNG demand declines.

 

 

From balancing market to firm importer

Before the crisis, Europe acted as the global balancing market for LNG, relying on three pillars of flexibility: the interplay between LNG and pipelines, coal-to-gas switching, and storage. In tight markets, Europe could import less LNG, draw more pipeline gas, and burn more coal. In oversupplied markets, it could absorb extra LNG by cutting pipeline imports, ramping up gas-fired generation, and refilling storage faster. This balancing role depended on LNG flexibility: only part of the supply was contracted specifically for Europe, while larger contracted volumes were held by aggregators, who optimized their portfolios and took advantage of Europe’s open-access policies and liquid spot markets.

The question now is whether Europe can reclaim that balancing role. Since 2022, EU countries have shifted into the position of firm LNG importers, while two of their flexibility pillars have largely vanished: the interplay with Russian pipeline gas is gone, and both coal and gas-fired generation have declined sharply. Mandatory storage-filling rules have also curtailed Europe’s ability to absorb global gas shocks. China is another possible candidate for the role, as it is both a major pipeline and LNG importer and is expanding storage capacity. Yet most Chinese gas is priced under different mechanisms, with only a small share exposed to gas-on-gas competition, and coal still remains far cheaper. Even so, since 2022, Chinese LNG companies have increasingly stepped into the role of global aggregators.

Finally, the past year has shown that gas is increasingly stepping in to cover gaps in the power sector, especially during Dunkelflaute or drought conditions. This swing role could cause LNG requirements to fluctuate significantly from one year to the next.

 

The increasingly political nature of supply decisions

In the early months of the Ukraine crisis, European policymakers scrambled for alternative supplies, but few deals bore fruit. Algerian pipeline deliveries declined despite promises to expand them, and the July 2022 memorandum with Azerbaijan has yet to generate new investments in Azeri gas. Extra LNG did reach Europe, but largely because high prices diverted cargoes away from other markets—most notably Southeast Asia.

 

 

Since 2022, several European gas companies—especially German buyers—have signed roughly 40 bcm per year in long-term LNG contracts, mainly with the U.S., Qatar, and the UAE. Aggregators, which were central to Europe’s supply in 2022, have also locked in substantial volumes.

Overall, European gas companies have yet to fully replace Russian supplies with new LNG contracts, even after factoring in lower demand. Uncertainty over future needs—especially if some Russian gas lingers or returns—has made firms wary of overcommitting, particularly given Europe’s Net Zero goals and the 2049 deadline for unabated fossil-gas contracts. One option is for EU companies to build global LNG portfolios, redirecting surplus cargoes to growth markets such as developing Asia. Yet even Europe-based aggregators will optimize portfolios globally in response to price signals, meaning Europe’s ability to secure enough LNG in tight markets could carry a premium. To address this, European authorities have introduced AggregateEU, a platform to pool demand and connect buyers with suppliers, though its effectiveness remains unproven.

 

Europe finds itself at a crossroads

Geopolitics have further complicated matters, with LNG purchasing now caught up in U.S.–EU trade talks. To avoid steep tariffs proposed by President Trump, Commission President von der Leyen agreed to buy $750 billion of U.S. energy over three years. The pledge looks disproportionate: in 2024, the EU imported €375 billion of fossil fuels in total, including about €76 billion from the U.S. While much of the debate has centered on LNG, oil remains the dominant import—also from the U.S. EU countries spent only about €15 billion on U.S. LNG in 2024, and even doubling that to €30 billion would still fall far short of $250 billion per year. The risk is that Europe could end up trading one dependency for another, shifting reliance from Russia to the United States.

The U.S. is not Europe’s only sensitive LNG supplier. Qatar has repeatedly threatened to cut off exports to EU member states if QatarEnergy faces penalties under the EU’s Corporate Sustainability Due Diligence Directive. In recent years, EU imports of Qatari LNG have held between 13 and 17 bcm annually, even as Qatar is on track to become the world’s second-largest LNG exporter after the U.S.

 

An uncertain future

As the world enters a major phase of LNG export expansion—one that could drive global spot prices sharply lower—Europe finds itself at a crossroads. Its two largest suppliers are pressing Brussels to meet their demands, even as uncertainty over future gas needs makes it difficult to judge how much additional LNG, if any, should be locked in to limit short-term price risk. And while Europe’s LNG imports are unlikely to surge again absent major shocks, Asia is poised to strengthen its position as the dominant force in global LNG markets.