Russia-Ukraine stand-off: What are Europe’s natural gas alternatives?

In the ongoing Ukraine-Russia saga, one of the most important aspects that can shape the course of this conflict is Europe's dependence on Russian energy. 

Aware of this shortcoming, European Commission President Von der Leyen recently stated at the Munich Security Conference that they are shifting to alternative suppliers as their dependency on Russia is not sustainable in light of increasing geopolitical tensions. 

''It was sort of obvious that Europe would start looking for new energy alternatives after the Green Deal,'' Professor Irfan Kaya Ulger, head of the International Relations Department of Kocaeli University, told TRT World.

Russia upped the ante in the past few days by recognising separatist-held Donetsk and Lugansk regions in eastern Ukraine as independent domains. 

The move brought the energy issue into the spotlight once again. It has become a vital bargaining chip between the two sides, especially after the European Union (EU) imposed sanctions on Russia in response to its recognition of two separatist-held territories. 

During her recent interview, President Ursula von der Leyen said that ''everything is on the table'', including imposing sanctions on one of the world's biggest gas giants, Gazprom. 

The company is the largest gas supplier in Europe, covering 40 percent of the region's natural gas demand. 

Moreover, Germany has halted the Nord Stream 2 Baltic Sea gas pipeline project, designed to double the flow of Russian gas into Germany. 

As Europe considers more sanctions as a counter-move in the Russia-Ukraine chess game, the possibility of the Kremlin cutting off natural gas has been concerning European leaders. 

In the past couple of years, Russian gas exports to Europe has been on the decline - exports are down by 32 percent in February 2022 compared to February 2020.

What are Europe's alternatives?

Liquefied natural gas (LNG)

LNG exports from the US to Northwest Europe has increased significantly in recent months, especially after Dutch gas prices rose along with the European benchmark prices. The hike is believed to be directly linked to Gazprom's reduction of gas supplies. 

European LNG imports from the US have reached record levels at around 400 million cubic metres per day. Roughly 125,000-175,000 cubic metres of natural gas is enough to keep at least 17 million British homes warm for one winter day. 

Although LNG can stand as an alternative in the near future, experts underline that the global LNG capacity and LNG-carrying vessels, including US sellers, are almost fully utilised.

The establishment of LNG infrastructure may also cost billions of dollars and take multiple years to build, despite Europe's abundance of storage space. 

According to Ulger, Qatar can supply additional gas to Europe as the world's largest LNG producer. However, the vast majority of production volume is under pre-order, limiting the amount of supply that Qatar can allocate.

On the other hand, countries such as South Korea, Japan and China and their suppliers indicated that they are inclined to redirect cargoes to Europe if Russian exports decide to cut off natural gas further. 

But analysts suggest that such shifts would likely carry higher prices, leaving European consumers with harsher bills than they encounter now.

Southern Gas Corridor

Azerbaijan is one of the countries exporting natural gas to Europe. With the Southern Gas Corridor, which was developed under the supervision of the European Commission and completed in 2020, Azeri natural gas is transported to Europe via the South Caucasus, Trans Anatolian and Trans Adriatic pipelines.

While South Caucasus runs parallel to the Baku-Tbilisi-Ceyhan pipeline, Trans Anatolia delivers natural gas to Europe via Türkiye. The Trans Adriatic Pipeline, on the other hand, provides natural gas to Italy via Greece and Albania.

“If there is an urgent need as we saw in Turkey, some volumes, of course, would be made available,” stated Azerbaijan’s ambassador to the UK, Elin Suleymanov, according to Bloomberg. 

However, there are some difficulties in making this route an alternative to Russian gas.

Suleymanov stated that although the energy-rich country Azerbaijan could send larger volumes to the continent, any substantial growth in volume would require Europe to sign long-term gas contracts. 

“We don’t look at energy security and potential expansion and increase in volumes through a short term crisis; you cannot succeed with short-term mandates,” Suleymanov said.

 “It’s long-term planning, it is a process, it’s not like someone shows up and says ‘Give me more gas.’”

But he also underlines the fact that still, the Azerbaijani volumes may not be equivalent to the Russian volumes.

Moreover, the countries in this energy corridor may not want to give up huge volumes due to their natural gas needs, or exporters may have to pay high prices to receive the gas. 

Norway, second-largest natural gas producer

Another alternative would be importing natural gas through pipelines from Norway. 

However, Europe’s second-largest natural gas producer Norway’s natural gas giant Equinor ASA has announced that it is shipping at the upper limit of its capacity with over 20 percent volume.

“There’s nothing much more we can do,” Equinor’s Chief Executive Officer Anders Opedal said in an interview on February 9 2022. 

“Norway is already producing at full speed.” 

The natural-gas free alternative

Many European countries can meet their energy needs with help from their neighbours or with nuclear, renewable, hydroelectric and coal alternatives. 

However, nuclear power availability is declining due to old facilities, decommissioning, phasing out and frequent leaks in Germany, England, Belgium and France.

Under pressure to meet zero-gas emission and climate purposes, many European countries have either shut down their coal-fired power plants or have not built new ones.  

''Europe now has principles such as green energy, environmental awareness and non-carbon sources on its agenda,'' Ulger told TRT World.

He added that in line with these aims, solar energy, nuclear energy and renewable energy steps will become more frequent in the long run.

In fact, the European Commission seeks to increase renewable hydrogen projects and deploy them in sectors where carbon emissions might otherwise remain high.

In this regard, Italy can become a clean energy hub for Europe by importing hydrogen produced from solar power in North Africa at 10-15 percent less than it costs to produce locally, according to a study by the European House - Ambrosetti and Italian gas group Snam.

Yet some countries have coal as a reserve resource. Due to rising natural gas prices, numerous European countries have switched from natural gas to coal since last year. This trend may continue to meet the urgent demand for gas in case of a Russian cut off. 

''Although it is too early to talk about this, in my view it is unlikely that Russia will cut off gas from Europe,'' Ulger said, adding that instead, they are most likely to find a middle ground as both sides are significantly interdependent on energy.