The USA is to supply additional LNG to the EU, in a deal that is an important part of the reconfiguration of the global energy landscape following the Russian invasion of Ukraine. Last year, the US supplied about 22 billion cubic metres of gas to EU countries, and that is set to rise by 15 billion cubic metres this year (to a level which is 24% of the total gas that Russia delivers per year).

Eventually, the US and “international partners” hope to supply 50 billion cubic metres, which will still only be around one-third of that currently supplied by Russia. However, with supply to come online from Qatar to Germany, probably in two-to-three years’ time, additional renewable power generation capacity being added, and the potential of added domestic biogas production, as well as additional natural gas supply from Norway via the soon-to-be-complete Baltic Pipe Project (with a maximum capacity of 10 billion cubic metres per year), future dependence on Russian gas looks set to be much diminished.

What this means for Russia is uncertain. Three weeks before the launch of the war in Ukraine, Russia made an agreement with China for a new pipeline to deliver 10 billion cubic metres of gas per year to China over a 30-year period, in addition to the ~38 billion cubic metres of capacity in pipelines already in place. There are also reports that a 50 billion cubic metre pipeline – the Soyuz Vostok gas pipeline, that would help connect western Russian production to the east – is to be studied and, if feasible, constructed. However, even if Soyuz Vostok goes ahead, the total volume to China will still be substantially less than the ~150-190 billion cubic metres supplied to Europe.

This suggests that Russia will need to agree additional enormous deals for additional gas supply to China (and, if it can, India and perhaps Turkey), expand its LNG export capacity and agree deals with ‘far-flung’ countries to make up the shortfall of supply to Europe. This does suggest an unlikelihood that Russia will be able to do so for an uncertain period, perhaps beginning around 2025, though much can happen before then. Geography, politics and logistics compound the situation. Pathways for the delivery of natural gas are more limited than those for oil (though Maersk’s decision to wind down its operations in Russia could diminish its oil export options) – non-EU countries such as Turkey that have existing pipelines might buy more gas, but India (which is currently buying more Russian oil at discounted prices) is not connected by pipeline to Russia (a planned pipeline project was abandoned last year), though it does buy some LNG from Russia.

The US-EU deal is an economic victory for the US, which has long sought to take Russian natural gas market share, but one that will sit somewhat uncomfortably with the Biden administration’s net-zero goals.