From Leverage to Dependence: Russia's Gas Sector Four Years After the Invasion

Key Takeaways

• EU gas storage at 30% capacity, near five‑year low
• Russian pipeline gas share in Europe dramatically declined
• U.S. LNG now second‑largest supplier to Europe
• Hormuz crisis forces EU to consider more Russian imports
• Power of Siberia‑2 negotiations may accelerate amid tight LNG

Summary

Four years after Russia’s invasion of Ukraine, Moscow’s gas strategy has shifted from dominating Europe to seeking new markets amid a severe EU storage shortfall. The EU’s gas inventories sit at just 30 % of capacity, prompting a short‑term reconsideration of Russian pipeline gas and LNG despite recent phase‑out rules. The Hormuz crisis has tightened global LNG supplies, making Russian cargoes attractive but also likely to be diverted to higher‑paying Asian buyers. Meanwhile, China is fast‑tracking the Power of Siberia‑2 pipeline to secure non‑Middle‑East gas, reinforcing Russia’s eastward pivot.

Pulse Analysis

Four years after the invasion, Russia’s gas export model has been forced to pivot. Once the undisputed backbone of European energy, Gazprom’s pipeline deliveries have fallen from roughly 150 bcm to a fraction of that, while the EU’s gas storage sits at just 30 % of capacity, the lowest point in half a decade. The bloc’s newly adopted phase‑out rules clash with the immediate need to secure supply, prompting policymakers to weigh short‑term imports of Russian pipeline gas and LNG against long‑term diversification goals. The shift also pressures Russian revenues, prompting Gazprom to expand LNG capacity to meet diversified demand.

The sudden shutdown of tanker traffic through the Strait of Hormuz has amplified global LNG tightness, removing Qatar’s output and curbing Middle‑East supplies. With European storage already depleted, the EU faces a narrow window to replace lost volumes, and Russian LNG—priced competitively and available on short notice—has re‑emerged as a viable stop‑gap. However, Moscow’s market‑driven approach means cargoes may be diverted to higher‑paying Asian buyers, potentially leaving some EU members exposed to short‑term shortages and higher price spikes. Price differentials are expected to widen, prompting EU regulators to consider strategic reserves and demand‑side measures.

Parallel to Europe’s scramble, China is accelerating talks on the Power of Siberia‑2 pipeline, seeking to lock in non‑Middle‑East gas amid the LNG crunch. Unresolved pricing, take‑or‑pay clauses and financing have stalled the project, but the Hormuz disruption sharpens Beijing’s incentive to secure a reliable Russian supply corridor. If agreements are reached, the pipeline could deliver up to 60 bcm annually, reshaping Eurasian energy flows and cementing Russia’s eastward pivot, while also giving Europe a stronger bargaining position in future negotiations. Long‑term, the pipeline could lock Europe into higher prices for alternative supplies, reinforcing the geopolitical tug‑of‑war over energy.