Fitch Ratings warned on Friday that replacing Russian natural gas in Europe could be difficult in the medium future, and that this will keep gas prices high.
According to the report, Europe imports over 60% of its total natural gas demand, with Russia providing approximately a third of the continent’s consumption – 152 billion cubic meters (bcm) through pipeline and 17 billion cubic meters (bcm) as liquefied natural gas (LNG).
The amount of Russian gas imported varies by country, with Germany and Italy importing the most, according to the report.
Europe plans to replace around 100 billion cubic meters of Russian gas by the end of this year with 50 billion cubic meters from additional LNG supplies from elsewhere, with the rest coming from wind and solar expansion, energy savings, and diversification of energy sources, according to the global rating agency.
The EU has a large LNG import capacity of roughly 157 billion cubic meters per year, of which only 80 billion cubic meters were used in 2021, leaving room for more, according to the report.
“However, the majority of LNG import terminals are focused in Spain, Portugal, France, and Italy, with insufficient existing pipeline infrastructure to supply gas to Germany and several Central and Eastern European nations that rely on Russian pipeline gas,” according to Fitch Ratings.
“In the near term, we believe the EU plan is achievable provided anticipated LNG capacity increases materialize, while competitive gas prices in Europe continue to redirect LNG from Asia, on top of more pipeline supply from Algeria, and expanding renewables and energy efficiency,” it added.
