In view of its imposing share in overall gas supplies to the E.U. during the second quarter of 2017, Russia sustained its leadership position as the number one supplier of gas to the region.

A recent European Commission report on gas import statistics for the second quarter of 2017 indicated that E.U. gas imports were eight percent higher than a year earlier. The growth was driven by increasing flows from Russia and rising liquefied natural gas (LNG) imports, while pipeline imports from North Africa decreased compared to the same period in 2016.

According to the E.C. report, throughout the second quarter of 2017, Russia remained the E.U.’s top supplier, covering 43 percent of extra-E.U. imports, followed by Norway (33 percent). Meanwhile, LNG imports made up 16 percent of the total gas mix, which was the highest share in the last four years.

In the second quarter of 2017, imports from Russia increased by 13 percent year-on-year and were only five percent less than the record-high level reached in the last quarter of 2016.

Moving towards more competitive pricing allowed Russia to increase sales and to augment its market share, as purely oil-indexed prices clearly exceeded hub prices in Northwest Europe. Gazprom now has a balanced portfolio in Europe, with half of its exports oil-indexed and the other half hub-indexed.

Russia accounted for only 41 percent of extra-E.U. gas imports in the corresponding period of 2016, the European Commission’s report on gas import statistics for the second quarter of 2017 indicated. Ukraine remained the main supply route for Russia’s gas coming to the E.U., accounting for a 45-percent share of total Russian imports. In the second quarter of 2017, the volume of Russian imports transiting Ukraine through the Brotherhood Pipeline and the Balkan route was 24 percent higher than in the corresponding period of 2016.

Gas flows on the Nord Stream pipeline represented 28 percent of total E.U. imports from Russia in the second quarter of 2017. Nord Stream volumes were two percent higher than one year previously.

Gas supplies transiting Belarus increased by 10 percent in the second quarter of 2017 compared to the corresponding period of 2016, comprising some 25 percent of E.U.’s total Russian imports. Deliveries through Belarus were constrained in the second half of June as a consequence of technical issues, with daily flows decreasing by up to 25 percent.

In the second quarter of 2017, Ukraine continued to rely on imports from Europe. Gas flows coming from Hungary, Poland, and Slovakia reached close to 2.7 billion cubic meters (0.09 tcf), about 7.5 times more than in the corresponding period of 2016.

The European Commission’s assessment shows that high spot prices in Asia indicated that Europe was not an attractive destination for LNG for most of the winter months of 2016 to 2017. In the liquid and well-connected Northwest European market, LNG was struggling to compete with the Russian pipeline supplies, leading to a decrease of LNG imports. Shipping liquefied natural gas to Europe in 2017 remains expensive and requires sizable infrastructure investment. LNG accounted for only 12 percent of the European gas supplies in the first quarter of the year.

On June 30, 2016, Gazprom’s CEO Alexey Miller stated that the company forecast the growth in European demand for imported gas to average at least 100 billion cubic meters (3.5 tcf) annually up until 2025. Demand is expected to rise to 150 billion (5.29 tcf) per year by 2035, “as [the] demand for imported gas in Europe grow[s] further. Even today, imported gas accounts for almost 50 percent of gas consumption in the region.”