Europe will remain heavily reliant on Russian gas for at least until the 2020s and potentially much longer due to the lack of an alternative, according to a report from Fitch Ratings.
The substitution of Russian gas is not expected, given the weak prospects for shale gas production, the lack of available imported liquefied natural gas (LNG) and the absence of significant pipeline projects in Europe which are independent from Russia, the rating agency says in the report released on Tuesday.
“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 in the report.
At best Europe could avoid significantly increasing its gas purchases from Russia, but Fitch’s analysis shows that in the long term the EU demand for gas will only increase. An average of 1.3 percent consumption growth per year is expected over the next 15 years, driven by economies’ recovery and the supremacy of gas fired electricity generation over coal and nuclear power.