EU gas demand is expected to fall more than Russian imports in 2023

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Brussels said it expects EU gas demand to fall by more than its total imports from Russia this year.

Gas-saving measures undertaken by the 27 EU member states are estimated to reduce consumption in 2023 by 60 bcm (bcm) compared to the bloc’s average usage over the past five years, according to an internal European Commission document viewed by the Financial Times.

This represents “more than the volumes of gas we still expect to import from Russia in 2023, both pipeline and [liquefied natural gas]”, states the document. It’s also 8 billion cubic meters more than what the bloc managed to save last year at the height of its energy crisis.

Kadri Simson, the EU’s energy commissioner, told a commissioners meeting on Wednesday that the drop in demand was not “good luck” but the result of a series of emergency laws passed in 2022 in the wake of the Russia’s full-scale invasion of Ukraine, according to speech notes seen by the FT.

Among the laws was an agreement that EU countries would voluntarily reduce gas consumption by 15%, a target that had been exceeded, according to the commission.

An EU official working on energy policy said “the figures on the reduction are quite startling”, adding that it meant “Russia has lost its gas leverage over Europe”.

Analysts stressed, however, that the EU experienced a mild winter in 2022 and high prices led to a reduction in output by energy-intensive industry.

If the blockade meets the commission’s expectations to reduce demand by 60 billion cubic meters, there could be oversupply and a “big, big drop in prices,” warned Henning Gloystein, director of energy, climate and security. resources at Eurasia Group.

In March EU countries agreed to extend the 15% demand reduction target for another year, though energy-saving efforts were not perceived uniformly across the bloc.

A report released on Wednesday by the European Environment Bureau found that only 14 of the 27 EU countries had introduced mandatory measures to reduce energy consumption and five of these – Germany, France, Italy, Spain and Portugal – accounted for the 60% of the required drop.

“The most robust gas-saving measures have been implemented in countries that import large quantities of Russian gas such as Italy and Germany,” the report said.

Bulgaria, Latvia and Romania were the only member states to have failed to implement any energy saving laws, which could in part be due to already low gas demand in those countries, the report noted.

Russian imports previously made up about two-fifths of the bloc’s gas, but have been steadily cut by Moscow before and since last year’s invasion of Ukraine in a bid to drive up prices and squeeze EU energy supplies. Preliminary data from the commission show that EU imports of Russian gas in March were 74% lower than in March 2021, the document said.

Overall annual gas supplies from Russia fell from 150.2 bcm in 2021 to 74.4 bcm in 2022, while imports in 2023 have so far amounted to 10.8 bcm, according to commission data.

Simson said the bloc’s gas cutbacks led the EU’s total monthly payments to Russia to fall from €21.4 billion in March 2022 to €2.7 billion in March 2023.

But efforts to finish completely Gas flows from Russia on routes where Moscow has already cut off supplies foundered at the G7 summit this month after being blocked by EU delegates.

Doubts also remain as to whether the EU can secure further gas supplies this year as most of the available LNG has already been contracted. “There is only so much on offer and a lot is already committed,” said a diplomat from a non-EU country. “It seems that the EU is asking for more than is feasible.”