Tough Choice: If Europe decides to slash gas imports from Russia, it will shoot itself in the foot

tankers, for instance. Mass shipments of U.S. gas are definitely a remote prospect, not the near future forecast,” he said.

According to Fitch, growth of gas production in the EU and gas supply from North Africa could compensate only a fraction of deliveries from Russia, while the global LNG market can offer only limited volumes since LNG is supplied on long-term contracts and the entire global LNG output equals only 50 percent of Russia’s natural gas deliveries to Europe.

Even if LNG reaches European terminals located primarily in the south and north of the continents, where dependence on Russian gas is smaller, sufficient pipeline infrastructure would be required to deliver that gas to buyers in central and eastern Europe, maintains Fitch.

Europe is unlikely to give up Russian gas over a longer term and that could happen only if the Ukrainian crisis seriously deteriorates, adds Fitch. Temporary disruptions in supply shouldn’t be ruled out in case of a “transit crisis,” but that problem could be minimized by using the Nord Stream pipeline. In that case, the European Commission’s permit to use the OPAL trunkline to full capacity would come in handy. OPAL is currently pumping only half of its total capacity. Seele notes that supply disruptions aren’t a major issue for the time being since Europe has enough gas in underground storages.

Russia Going East?

Preparing their response to the West, Russian authorities have been talking about imposing their own sanctions, as well as about their plans to reroute energy deliveries to the East. Moreover, Russia has been long targeting the Asia-Pacific region in its attempt to diversify gas exports: Gazprom is in protracted talks to deliver pipeline gas and LNG to China and South Korea, and a number of Russia’s independent gas producers have pledged to build LNG plants that would cater to Asia-Pacific buyers. Industry experts agree that Russia’s current clash with the West could accelerate Moscow’s decision to accept China’s offer for the purchase of 38 billion cubic meters of Gazprom’s gas per year and build a Russia-China gas pipeline, which has been discussed for over 10 years now. According to Tatiana Mitrova, head of Russia and World Oil and Gas Sector Dept. at the Energy Research Institute of the Russian Academy of Sciences, Russia needs this deal very much under current circumstances, as much as China needs it in its attempt to access Russian energy resources. At the same time, adds Mitrova, the key aspect in talks with China is not the price, since Beijing is buying gas from other suppliers at even higher prices than Gazprom’s, but the access to Russia’s upstream assets, as China’s major goal is to have control over the entire supply chain. Mitrova hasn’t ruled out that the potential agreement could expand beyond the gas business and include cooperation in other sectors, too.

Meanwhile, foreign firms aren’t rushing to leave Russia. Total representatives said they were ready to increase the number of oil and gas projects in Russia, while Seele noted