as Russian pipeline gas, Europe’s dominant supply source for decades, has sharply declined. From nearly 180 bcm of Russian gas exports to Europe in 2020, flows have fallen to around 52 bcm per year by 2024, forcing the EU to rapidly plug a massive supply gap.
LNG has stepped in to fill much of that vacuum. Last year alone, the EU imported about 101 bcm of LNG, with the United States accounting for roughly half of total volumes. American LNG has effectively become Europe’s swing supplier, reshaping transatlantic energy relations and anchoring a new supply model based on global spot markets rather than long-term pipeline contracts. At the same time, the US is rapidly scaling up production, with LNG exports up by some 27% compared to last year, adding further liquidity to global markets and pushing additional volumes toward Europe.
This surge in supply has had a noticeable impact on prices. Earlier this week, Henry Hub gas contracts were trading around $4.00/MMBtu (or ~€12.00/MWh) lower than at the start of 2025 but still higher than the levels seen last September. At the same time, the TTF benchmark front-month market was trading at €31.94/MWh. For European buyers, this combination of rising US output and ample LNG availability has offered a measure of relief, helping to keep prices well below the crisis peaks of 2022. Yet beneath this apparent stability, analysts see growing risks that could shape the next phase of the LNG market.
As winter tightens its grip, concerns are mounting that Europe’s LNG appetite could push prices higher once again. Seasonal demand is rising across the continent, while competition for cargoes is intensifying globally. Asia, particularly China and emerging Southeast Asian markets, is gradually returning to the market after a period of subdued demand, increasing pressure on available LNG supply. Unlike pipeline gas, LNG is inherently global, and Europe now finds itself competing head-to-head with other major importers for marginal cargoes.
Adding to this pressure is the role Europe is playing in supporting Ukraine’s energy system. With much of Ukraine’s gas and power infrastructure severely damaged by ongoing Russian attacks, European LNG importers, especially those operating from Greece, have been forced to bring in additional volumes to meet rising regional demand. Through the Vertical Corridor, gas is increasingly being shipped northwards to Ukraine, supplementing domestic production and limited storage capacity. Similar dynamics are visible in Poland and Lithuania, where LNG terminals are operating at high utilisation rates as gas is sent south toward Ukraine. While this demonstrates Europe’s growing energy solidarity and logistical flexibility, it also places extra strain on the LNG supply chain at precisely the time when seasonal demand peaks.
These developments raise a fundamental question: is Europe’s expanding reliance on LNG sustainable in the long run? From an energy security perspective, LNG has undeniably enhanced diversification, reducing dependence on a single supplier and offering flexibility that pipelines cannot match. Floating storage and regasification units (FSRUs), new terminals, and expanded interconnections have strengthened Europe’s ability to respond to shocks. In this sense, LNG has become an indispensable tool in managing geopolitical risk.
However, diversification should not be confused with independence. With LNG imports rising steadily, the EU’s overall energy dependency has climbed to nearly 60%, significantly higher than five years ago. This growing reliance on imported energy, albeit from a broader set of suppliers, carries economic and strategic consequences. LNG is typically more expensive than domestic production or long-term pipeline gas, particularly when markets tighten. Transport costs, liquefaction fees, shipping rates, and regasification charges all add layers of cost that ultimately feed through to consumers and industry.
Higher energy dependency also exposes Europe to vulnerabilities beyond price volatility. LNG supply chains stretch across oceans and through critical maritime chokepoints, making them sensitive to geopolitical tensions, military risks, and logistical disruptions. As global instability rises, from conflicts in the Middle East to tensions in key shipping lanes, the resilience of LNG flows cannot be taken for granted. What appears today as a flexible and diversified system could quickly become fragile under stress.
There is also the broader question of market balance. If European LNG demand continues to expand at its current pace, prices are likely to become increasingly sensitive to weather events, outages, and geopolitical developments. Even modest disruptions could trigger sharp price swings, undermining the stability that policymakers hope LNG will deliver. For energy-intensive industries already struggling with high power and gas costs, this volatility poses a serious challenge to competitiveness.
Looking ahead, the direction of the LNG market will depend on several interlinked factors. Global supply growth, particularly from the US and Qatar, will be crucial in determining whether markets remain well supplied or tighten further. Demand trends in Asia will shape competition for cargoes, while Europe’s own policy choices, on storage, long-term contracts, and domestic energy production, will define how exposed the continent remains to global market forces.
Ultimately, LNG is likely to remain a cornerstone of Europe’s energy system for years to come. But relying ever more heavily on LNG without addressing underlying structural issues, such as the lack of indigenous production, high energy costs, and rising dependency, carries clear risks. The challenge for Europe is to strike a balance: leveraging LNG’s flexibility and security benefits while avoiding a new form of overdependence that could prove just as costly as the one it replaced.
The question is no longer whether LNG will shape Europe’s energy future, it already does. The real issue is whether Europe can manage this transition in a way that delivers affordability, resilience, and strategic autonomy in an increasingly volatile world. Will European governments and the EC rise up to the challenge of developing the continent’s indigenous hydrocarbon and geothermal resources? Ultimately, such a strategy could help balance the current onslaught of huge LNG inputs and drive towards more affordable energy prices.
*Costis Stambolis is the Chairman and Executive Director of IENE