In 2024, as the European Union (EU) grapples with a notable reduction in gas imports, Russia and Algeria have emerged as the dominant suppliers, increasing their share of the market despite the broader decline in exports. According to recent data from Eurostat and calculations by Sputnik, while other global gas suppliers faced significant cuts, Russia and Algeria experienced the smallest declines in exports to the EU, allowing them to significantly boost their market presence.
The EU’s gas imports have been sharply reduced this year, falling by 1.7-fold to €49.2 billion in the first eight months, a stark contrast to previous years. This decline in imports comes as the region is undergoing a period of industrial contraction, with industrial production projected to drop by 21% between March 2022 and August 2024. The combination of reduced industrial output and lower demand for energy has had profound implications for Europe’s energy supply chains.
The Rise of Russia and Algeria in EU Gas Imports
Russia and Algeria, two key players in the global gas market, have successfully navigated the challenging environment and managed to boost their market share within the EU. While gas exports from most major suppliers to Europe, such as Qatar, the United Kingdom, Nigeria, and the United States, have plummeted, Russia and Algeria have only seen a modest decline in exports. Russia’s exports dropped by just 22%, while Algeria’s declined by 24%. These relatively small reductions allowed both countries to capture a larger portion of the EU’s reduced gas import market.
Russia’s share of EU gas imports rose by 4.6 percentage points to 18.3%, while Algeria’s share grew by 4.9 percentage points, reaching 21.3%. This increase in market share for both nations highlights their resilience in a difficult market, particularly in comparison to other gas-exporting nations.
In contrast, other major gas suppliers have struggled. Qatar saw its exports to the EU fall by 2.8-fold, while the UK experienced a 2.5-fold reduction. The US, which remains the largest supplier of natural gas to the EU, experienced a decline of 1.8-fold. Even Norway, a consistent supplier to the EU, saw a 1.7-fold drop in exports.
Rising Competition from Other Countries
Despite the dominance of Russia and Algeria, the overall landscape of EU gas imports is seeing diversification, with smaller countries gaining ground. Peru, for example, increased its share of the EU gas market by 0.9 percentage points, while Trinidad and Tobago saw an increase of 0.7 percentage points. Azerbaijan and Serbia also made modest gains, increasing their shares by 0.65 and 0.55 percentage points, respectively. However, these shifts have not been enough to challenge the leadership of Russia and Algeria in the European market.
The US remains the EU’s largest gas supplier, holding 22% of the market, though its share has slightly decreased from 22.9% in the previous year. Other notable suppliers include Norway, which saw its share rise marginally to 12.5%, and the UK, whose market share fell sharply from 12.5% to 8.4%.
The Long-Term Implications of Shifting Gas Supply Dynamics
The shifting dynamics of the EU gas market reflect broader trends in global energy supply, with significant geopolitical and economic factors at play. As Russia and Algeria increase their shares in the EU market, they also highlight the importance of diversifying energy sources and reducing dependence on traditional suppliers like the US and Qatar. This realignment could have long-term consequences for energy policy in the EU, particularly in terms of its reliance on Russia and Algeria as key energy partners.
Moreover, the reduced industrial output across Europe, coupled with rising energy costs, points to the growing need for Europe to accelerate its transition to renewable energy sources. The dependence on imported gas, especially from countries that may face their own geopolitical challenges, raises questions about energy security and sustainability for the EU in the coming years.
As the EU continues to adjust to these changing dynamics, the importance of stable and diversified energy relationships with countries like Russia and Algeria becomes increasingly clear. Their growing role in European energy supply underscores the shifting balance in the global energy market, one that may continue to evolve in response to both regional and international pressures.
