Russia-Ukraine conflict could reshape Europe's natural gas reliance

Europe relies on Russia’s natural gas to help heat millions of homes, generate electricity and power factories. With Russian troops massed along Ukraine’s border, Europe’s heavy dependence on Russia is limiting its diplomatic options and may throw its energy supplies into turmoil.

Analysts and industry executives are sceptical that Putin would cut off gas, in part because of how important gas exports are to his country’s economy.

In 2021, 38 per cent of the natural gas used by the EU came from Russia, according to Bruegel, a research organisation. Some countries, like Poland and Lithuania, have been gradually reducing their reliance on Russia. For others, the dependency has been steadily growing.

Germany, which is at the centre of the diplomatic stand-off, is Moscow’s most important customer. The bulk of the gas to Germany flows directly from Russia through a large pipeline in the Baltic Sea known as Nord Stream. A second pipeline, Nord Stream 2, was recently completed at a cost of $11 billion. Fuel has yet to flow through Nord Stream 2. Critics warn that the new pipeline could allow Moscow to wield greater influence over the continent and starve Ukraine of transit fees through its existing pipeline network that are crucial to Kyiv’s economy.

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