On June 17, Caijing News (editor Xiaoxiang) reported that although Europe has been trying to reduce its dependence on Russian fossil fuels since the outbreak of the Russia-Ukraine conflict, an unexpected situation occurred last month:

In May, the amount of natural gas (including liquefied natural gas) imported from Russia to Europe surpassed that from the United States for the first time in nearly two years.

According to data from the commodity information service provider ICIS, last month, pipeline and liquefied natural gas transportation from Russia accounted for 15% of the total supply in the European Union, the United Kingdom, Switzerland, Serbia, Bosnia and Herzegovina, and North Macedonia.

ICIS data also showed that in the same month, liquefied natural gas from the United States accounted for 14% of the region's supply, the lowest level since August 2022.

Although there are many one-time accidental factors in the emergence of this situation, it still highlights the difficulty for Europe to further reduce its dependence on Russian natural gas-Eastern European countries still rely heavily on natural gas imported from Russia.

Tom Marzec-Manser, ICIS's natural gas analysis director, said, "After experiencing so much and making so many efforts to decouple and de-risk energy supply, Russian natural gas and liquefied natural gas are still increasing in the European market, which is shocking."

As shown in the figure below, although multiple EU countries are beginning to push for sanctions against Russian liquefied natural gas, Europe's total imports of Russian natural gas have actually been slowly rising since the fourth quarter of 2022.

After the Russia-Ukraine crisis broke out in February 2022, Russia cut off its natural gas supply to Europe through pipelines. Russia also stopped supplying natural gas to Europe through pipelines connecting northwest Europe in mid-2022, but continued to supply natural gas through pipelines in Ukraine and Turkey.

On the European side, liquefied natural gas imports have increased-Key supplying countries are transported by dedicated ships, and the United States is a key supplying country.

In September 2022, the United States officially surpassed Russia as the main natural gas supplier to Europe, accounting for about one-fifth of the natural gas supply in the European region since 2023.

Why did the May data show a reversal?

So, how did the supply data in May surpass it?

Some industry insiders said that the natural gas flow in May was affected by some one-time factors, including a major liquefied natural gas export facility in the United States experiencing failures, while Russia sent more natural gas to Europe through Turkey before the planned maintenance in June.

The overall natural gas demand in Europe in May was relatively weak, and the inventory level approached the highest record for this period of the year.

Marzec-Manser of ICIS stated that this (reversal of the supply source) cannot last, because Russia will be able to transport liquefied natural gas to Asia through its northern sea route in the summer, which may reduce the amount of liquefied natural gas transported to Europe, while the overall production of liquefied natural gas in the United States has rebounded.

He added, "As winter (natural gas) demand grows, Russia's flexibility in maintaining this (European) share is limited, and the overall production of US liquefied natural gas will only increase, and more new production capacity will enter the global market by the end of this year."

In addition, the natural gas transit agreement between Ukraine and Russia will also end at the end of this year, which poses risks to the natural gas circulation on that pipeline.

According to sources familiar with the matter, in order to prevent the Russia-Ukraine conflict from further damaging energy supplies to the European continent, European officials are currently discussing how to allow natural gas to continue to be transported through a key Russia-Ukraine pipeline. Some officials said that one solution under discussion is for European companies to buy natural gas from Azerbaijan and inject it into the pipeline that runs from Russia to Europe (via Ukraine). Such an arrangement can allow Europe to avoid the embarrassment of buying Russian natural gas while trying to reduce Moscow's energy revenue.

Currently, some European officials still feel uncertain about whether Europe's energy security can be guaranteed.

Kadri Simson, the European Union's Commissioner for Energy, expressed concerns over the use of liquefied natural gas from Europe to meet Asia's demand during her trip to Japan this month. She said that a "warning system" had been set up between Japan and the EU to monitor liquefied natural gas shortages, and both sides agreed to take energy-saving measures.

She added, "The EU is ready to cushion any negative supply and demand events in the global natural gas market. Our natural gas reserves are at record highs and our natural gas demand is at record lows -- a 20% drop from 2021."