Europe uses a lot of crude oil and natural gas (to the tune of billions of cubic feet per year). The difference is crude oil is easily transported by ships from all over the world, while natural gas is mostly delivered by pipelines.
Of course, the amount that Europe uses has been going down steadily over the past few years. In 2008, Europe used 20,556 billion cubic feet of natural gas. That fell by 1,000 billion cubic feet in 2009, and continued to fall into 2012 when the continent used 18,684 billion cubic feet of natural gas.
As a whole though, the European Union uses the second most natural gas in the world, ranking well behind the United States, the largest user on Earth, and just ahead of Russia. Within Europe, the largest consumer of natural gas is the United Kingdom, followed close behind by Germany and Italy. Those are the only two countries in the top 10 of natural gas consumption worldwide as well.
Where does it come from?
As a whole, Europe does not have a lot of natural gas, and certainly not enough to supply the entire continent. As a result, Europe imports a large amount of natural gas from elsewhere. Currently, the number one producer of European natural gas is Russia, with the country comprising 38.7 per cent of the total imports of European Union natural gas. Roughly 25 per cent of all natural gas used in the European Union comes from Russia.
The natural gas comes from 13 pipelines that come from Russia. In terms of who imports the most, that would be Germany and Italy, who together account for half of the EU gas imports from Russia. Other major imports of Russia natural gas to the tune of over five billion cubic meters per year, are France, Hungary, Czech Republic, Poland, Austria and Slovakia.
In terms of how it breaks down, the following countries get 100 per cent of their natural gas from Russia:
The following countries get over 75 per cent of their natural gas from Russia:
- Slovakia – 98 per cent
- Bulgaria – 92 per cent
- Czech Republic – 77.6 per cent
- Greece – 76 per cent
The following countries get over 30 per cent of their gas from Russia:
- Hungary – 60 per cent
- Slovenia – 52 per cent
- Austria – 49 per cent
- Poland 48.15 per cent
- Germany 36 per cent
The following countries get less than 30 per cent of their gas from Russia:
- Italy – 27 per cent
- Romania – 27 per cent
- France – 14 per cent
- Belgium – 5 per cent
Currently, the European Union pays $53 billion for natural gas from Russia.
How does Ukraine impact this?
The Ukraine crisis has remodeled the European natural gas equilibrium. While many are looking to the European Union to get its natural gas from elsewhere than Russia, it is important to point out that most European country customers have long-term legal contracts for gas delivery from Russia, regardless of disputes, that go beyond 2025 to 2030. Nonetheless, there is a call to diversify the energy market of Europe to combat Russian dominance of natural gas in Europe.
There are talks of other countries providing natural gas, with Canada being one of the leading contenders. Canada has some of the largest natural gas stores in the world, and even Chancellor Angela Merkel of Germany stated her excitement to get natural gas from Europe, since her country currently gets most of its natural gas from the UK, Norway and Russia.
Of course, it is unlikely to happen anytime soon. Canada would need to update and enlarge its natural gas port facilities on its east coast, and Europe is unlikely to sign 30 to 40 year contracts with Canada for natural gas at this time.
In order for cargoes of natural gas to come to Europe from other than Russia, it is expected that natural gas prices on the continent would have to double. UK prices would have to rise by 127 per cent to attract liquefied natural gas to replace Russian fuel.
If Russia were to halt its gas supply in the summer, this would cause a doubling of the prices in the United Kingdom.
Currently, European terminals can import 199 billion cubic meters of gas per year, and Russia supplied 138 billion cubic meters.
While there is the worry about natural gas stoppage from Russia, it is unlikely the country would go to that drastic action considering how much money it gets from the European Union for natural gas. More likely, is that Europe will continue to use Russian natural gas since it is much easier to get than gas from elsewhere.