Europe to Rely Heavily on Russian Gas Until 2020 at Least, Fitch Says

Europe will remain heavily dependent on Russian gas supplies for at least the end of this decade and “potentially much longer”, Fitch Ratings has said.

The lack of major pipeline projects in Europe independent from Russia, the scarcity of available imports of liquefied natural gas and the weak prospects for of shale gas production in meaningful volumes in Europe over the next 10 years suggest that at best the European Union may be able to avoid significantly increasing its gas purchases from Russia, the global ratings agency said in a report.

Fitch expects European demand for natural gas to grow slightly until the mid-2020s. After that it is likely to accelerate as gas-fired electricity generation replaces old coal and nuclear capacity, although renewables will also fill part of the gap.

"Any attempt to improve energy security by reducing European reliance on Russia would require either a significant reduction in overall gas demand, or a big increase in alternative sources of supply, but neither of these appears likely," Fitch said.

Europe’s gas demand was 530 billion cubic meters last year, of which Russia supplied 27%.