While Europe’s sprawling network of pipelines is its main source of gas, the continent is increasingly reliant on LNG — super-chilled to change it from a gas into a liquid so it can be condensed in size and shipped around the world on tankers.
Europe is part of a growing global competition for gas, vying with energy-hungry Asia, which has little of its own.
China’s demand has doubled in the past decade and is expected to accelerate further as it tries to limit coal use in its fast-growing economy. Japan and South Korea are also looking to cut coal use as they attempt to curb emissions.
Australia is the key LNG supplier to Asia, but the continent is also taking gas from Qatar, the US and Russia.
Gas buyers in Asia are often state-backed entities willing to pay almost any price necessary to meet government targets for gas supplies — further limiting the supply available for Europe.
As winter starts, Europe’s leaders are left hoping that the weather would be mild — or that Russia would let the necessary exports flow.
Putin has advised Gazprom to start pumping gas into European storage sites once Russia finishes filling its own stocks, which could begin on November 8.
But until the market is convinced that supplies will not run short, prices are set to remain volatile — and Europe’s reliance on energy from elsewhere will remain under scrutiny.
Notes: FT research based on Entsog; SciGRID; University of Groningen and Wood Mackenzie data. Crimea is annexed by Russia but this is not recognised by the international community.