The Russian war against Ukraine has focused Europe on the issue of energy security, especially as it relates to natural gas. The continent has previously relied on Russia for more than 40% of its gas, but it now must scramble for new suppliers and alternative forms of energy. The matter is particularly urgent in a few countries along or very near the Russian border, including Lithuania, Poland and Ukraine itself. Fortunately, almost two years ago the three countries formed the “Lublin Triangle,” an alliance of sorts with the aim of enhancing military, cultural and economic cooperation while also supporting Ukraine’s prospective integration into the European Union and NATO. In today’s RBN blog, we discuss the potential for developing a “New Gas Order” in Europe.
The central issue at hand is the best way for European countries to replace Russian supplies. At the macro level, enhanced LNG import infrastructure, regasification facilities, pipelines, etc., can create access for the supply of LNG from the U.S., Qatar and others. But, as we explained in Everything Has Changed, Europe faces significant challenges in attracting and accommodating new supplies of LNG, including the need to expand pipeline systems and the mediums through which gas might be contracted. Progress is being made. For example, on May 4, Estonia and Finland agreed to the joint leasing of a floating storage and regasification unit (FSRU) from U.S. company Excelerate. The vessel will be berthed in either northern Estonia or southern Finland (FSRU icons at upper-center of Figure 1), where its regasified LNG supplies can be fed into the Balticconnector pipeline (orange line) between the two countries, providing supplies to both, and potentially to Latvia as well.
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