Russian gas to Europe: How much is needed in 2022?

• Many supply and demand levers are possible to reduce Russian gas supply to Europe in 2022. However, not all of them can transpire at the same time.
• On the gas demand side, the volume requirement is determined by the pace of retirements and restarts of coal and nuclear capacity; the economics of gas versus coal generation; and the impact of high commodity prices on demand for gas and power.
• On the supply side, existing producers can squeeze out more gas, but the major determinants are the availability of LNG and any political imperatives that mandate reductions of Russian gas.
• Taken together, these factors have the potential to reduce Russian gas supplies to Europe in 2022 by 30-60 Bcm, leaving Russian supplies in the range of 80-110 Bcm this year. LNG imports range from 90 Bcm to 125 Bcm.
• Further reductions in Russian imports below this level would require additional government measures, including mandated rationing of gas to some sectors and intervention in LNG purchasing. Purchasing sufficient LNG to maximize regasification utilization in Northwest Europe and Italy could reduce Russian imports to around 50 Bcm in 2022. Any further reductions in Russian imports would need to come from demand side measures.

Posted 29 March 2022 by Alun Davies, Senior Director, European GPE retainer service, S&P Global Commodity Insights and

Catherine Robinson, Executive Director, Gas, Power, and Energy Futures, S&P Global Commodity Insights

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.