Oil and gas prices jumped after Russia invaded Ukraine on February 24.
The US has banned oil and gas imports and the UK is phasing out oil imports as part of a series of Western sanctions aimed at cutting Russia off from the world’s financial arteries. The European Union, meanwhile, said it would end its dependence on Russian gas.
In 2020, the world consumed 3,822.8 billion cubic meters (bcm) of natural gas, according to the BP Statistical Review of World Energy 2021. The United States alone accounted for more than 20% (832 bcm) of the annual global gas consumption, followed by Russia (411.4 bcm) and China (330.6 bcm).
Russia has the largest natural gas reserves, followed by Iran and Qatar. Together, the three countries accounted for half of the world’s natural gas reserves in 2020.
Russia has proven reserves of about 48.938 billion m3, Iran 34.077 billion m3 and Qatar 23.831 billion m3.
Which countries export the most natural gas?
Unlike the Organization of Petroleum Exporting Countries (OPEC), there is no multinational organization of major gas exporters that adjusts supply to balance the market.
However, the Gas Exporting Countries Forum (GECF) exists as an 11-member organization comprising Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago and Venezuela.
Angola, Azerbaijan, Iraq, Malaysia, Mozambique, Norway, Peru and the United Arab Emirates have the status of observer members. The consortium represents 71% of the world’s proven natural gas reserves.
Over 80% of global gas exports are linked to 10 major exporters. In 2020, the 10 largest gas exporters in the world were Russia (199,928 mcm), the United States (149,538 mcm), Qatar (143,700 mcm), Norway (112,951 mcm), Australia (102,562 mcm), Canada (70,932 mcm), Germany (50,092 mcm), Netherlands (39,976 mcm), Algeria (34,459 mcm) and Nigeria (35,586 mcm).
Which countries are most dependent on Russian natural gas?
In 2019, the world’s top exporters of natural gas were Australia ($34 billion), Qatar ($27.5 billion), Russia ($24.5 billion), Norway ($21 billion ) and the United States ($16 billion).
Italy bought around a quarter (24%) of Russia’s total natural gas exports, worth $5.8 billion. This represented only 39% of the country’s natural gas imports.
At least 37 countries imported Russian gas in 2019. The countries most dependent on Russian gas are: Belarus, Bosnia and Herzegovina, Norway and Serbia – each importing around 99% of their gas from Russia.
The chart below shows what share of each country’s total natural gas imports comes from Russia.
How is gas used and produced?
Natural gas is used in transport, to generate electricity and heat homes, as well as in the industrial sector to produce raw materials such as glass, plastics and paint, among others.
Odorless and colorless, natural gas is formed over millions of years from decomposed organisms, silt and sand, which are then exposed to heat and pressure below the Earth’s surface.
Methane is the largest component of natural gas, which also contains smaller amounts of natural gas liquids and gases such as carbon dioxide and water vapor.
The gas is extracted by drilling vertically or horizontally into the ground, which allows the gas to rise through wells to the surface. From the wells, the natural gas is then sent to processing plants where water vapor and non-hydrocarbon compounds are removed and NGLs (liquid natural gas) are separated from the wet gas. It is then distributed to consumers through a network of pipes.
European dependence on Russian gas
Russia has the second largest gas infrastructure in the world after the United States with a total length of almost 100,000 km (62,137 miles).
In 2021, European gas imports from Russia amounted to more than 380 million cubic meters (mcm) per day by pipeline, totaling around 140 billion m3 for the year, according to the IEA. An additional 15 bcm were delivered in the form of liquefied natural gas (LNG). Russia accounted for around 45% of EU gas imports and 40% of its total gas consumption.
The EU has announced a strategy to reduce its dependence on Russian gas by two-thirds by the end of 2022. The REPowerEU plan aims to find alternative gas supplies and greener energy sources.
Russia’s footprint in the global oil and gas market is significant, and with tough sanctions on Russia’s energy sector, the effects are felt globally. Gas prices in Europe and the UK rose significantly in March after the invasion, but have since consolidated as Russia and Ukraine engage in peace talks.
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