Europe's Risky LNG Strategy: US & Russia Dominate Imports

Europe's sources for liquefied natural gas (LNG) are becoming dangerously concentrated, with reliance on the United States and Russia surging to a record level last month. This growing dependence raises serious questions about the region's failure to diversify its energy supply chain.

Ship-tracking data for January shows that the European Union sourced more than 80% of its LNG from just two countries: the US and Russia. This is a stark reversal from four years prior, when other global suppliers accounted for roughly half of the EU's imports during the energy crisis that followed Russia's invasion of Ukraine.

The American LNG Dilemma

The surge in US supply is a primary source of concern. American LNG now accounts for a massive 63% of the EU's total imports. Several European politicians have warned that this deepens the bloc's vulnerability to an administration that has shown a willingness to use financial pressure against its allies.

Following the 2022 assault on Ukraine, and especially with Donald Trump's return to the US presidency, Europe faced pressure to increase its purchases of American energy. A trade agreement last year locked the EU into a commitment to buy $750 billion worth of US energy by 2028. As President Trump threatens economic penalties against nations that don't align with his policies, these commercial ties are increasingly viewed as strategic risks.

High-ranking EU officials, including competition chief Teresa Ribera and energy commissioner Dan Jorgensen, have voiced alarm over this dependence, particularly after Trump's threats regarding Greenland.

Russia's Enduring Grip on Gas Supplies

Meanwhile, LNG shipments from Russia to the EU continued to hover near record highs, making up 18% of the total volume in January. This trend may be driven by traders stocking up on supplies before a phased-in ban on Russian gas imports takes full effect. All energy dealings between the EU and Russia are scheduled to cease by late 2027.

A Shrinking Pool of Global Suppliers

The dominance of the US and Russia has squeezed out other traditional suppliers. The collective share of LNG from countries like Algeria, Qatar, Norway, and Trinidad & Tobago fell to just 19% last month—the lowest figure in Bloomberg's data, which dates back to 2017.

The concentration is particularly acute in key member states:

• France and Belgium: Both received over 40% of their LNG from Russia in January, with a similar amount coming from the US.

• Germany: Europe's largest energy market relied entirely on the US for its LNG imports.

In response, German Chancellor Friedrich Merz visited the Middle East this week to explore ways to diversify his country's energy sources. His trip followed comments from Commissioner Jorgensen, who stated the EU is considering increased gas imports from Qatar, Canada, and North Africa.

Winter Demand and the Scramble for Alternatives

Several factors contributed to January's import patterns. A series of cold spells across the continent drove up immediate demand for fuel. At the same time, exports from Algeria, one of Europe's oldest suppliers of the super-chilled fuel, experienced a drop.

Looking ahead, Europe's total LNG consumption is projected to reach an all-time high this year as the bloc works to replenish its depleted gas inventories. The situation is especially urgent in Germany, where storage facilities are less than one-third full—well below the seasonal average, with winter far from over.