Save for later Print Download Share LinkedIn Twitter The gas industry outside Russia may be able to provide a short, sharp boost to European supply. But it won’t be long term and it won’t be big. If Germany manages to build receiving terminals quickly, how much gas will they receive? Some, if they outbid Asian buyers, but not much until mid-decade. In fact, it’s unlikely that alternative gas supply in anything like the volumes Europe takes from Russia will ever materialize at affordable prices. Europe imports more pipeline gas from Russia than the entire LNG export capacity of either the US or Qatar. New LNG export capacity this decade will be too little and too late for the purpose. It will be quicker for Europe to boost renewables and efficiency, and to electrify heating and industrial gas processes. In the meantime, Europe’s choice is basically to keep buying Russian gas or make do with a lot less gas. That means Europe could face severely constrained growth prospects for years to come. It's hard not to deeply admire the fortitude Ukraine has exhibited since Russia invaded its core territory just over a week ago, and not to want to do whatever is possible to help. It’s also hard not to want to respond aggressively, especially for those — probably including the leaders of Germany, Italy and other European states — who ignored so many warnings that something like this could happen to threaten Europe’s apparently secure energy supply from Russia.However, hoping that imported LNG can make it all OK is falling for an even bigger dollop of self-deception. Any steps to cut off or sharply restrict Russian gas supply, or push Russia closer to closing the spigot, should be considered only with a clear understanding that there is no alternative when it comes to natural gas for Europe.The International Energy Agency (IEA) issued a 10-Point Plan that suggests Europe drop contracts equivalent to 12% of supply from Gazprom that come up for renewal next year. It then suggests that, with accelerated efficiency measures and renewables installation taking up much of the slack, some extra pipeline gas from existing exporters and swapping out Russian for other LNG, Europe could cut dependance on Russian gas more sharply than that — by one-third in a single year.It sounds nice, but it is full of uncertainties and would almost assuredly keep global LNG prices at an absurd boil and runs some risk of retaliation through even bigger cuts by Russia. How much risk to take is a political decision the European public might accept, at least while emotions over Ukraine are running high. But the decision should be taken with eyes wide open and the economic and social risks firmly in mind.Not Like OilNatural gas is inherently inflexible, even when transported as a liquid. Altering transport and supply patterns is time-consuming and expensive. It’s not like oil, and it would be a big mistake to suppose it is.Even with Russian gas still flowing into Europe, spot prices have soared in Europe and in LNG markets worldwide. LNG spot quotes are at heights more than 10 times those of US gas prices, which have themselves roughly doubled over the last year, as LNG export terminals revved up to full capacity to take advantage of soaring prices around the globe. This is already creating rumblings from US domestic users about the benefits of limiting exports to shelter the domestic gas market.LNG remains a viable fuel source for Asia at the moment only because most of it is still price-linked to oil and therefore much cheaper than spot cargoes. That’s true even though oil is now well over $100 per barrel.US shale gas output can and probably will jump back up in response to higher prices, helping ease US domestic gas market pressure. Getting new LNG liquefaction and export capacity will take longer. The US has one fairly sizable bit of new capacity now ramping up that could replace 5%-9% of the constrained volumes of gas Russia piped to Europe last year, depending on how fast it ramps up and whether any of it goes to other markets. After that, no sizable additions from the US are in prospect before mid-decade. Qatar also has sizable new capacity planned, but it won’t conceivably be on line before mid-decade either. And LNG projects are notorious for missing deadlines and running overbudget. What’s more, developers are seeking 15-20-year contracts, implying purchase obligations would extend at least to 2040, when European and global gas demand is highly unpredictable, to put it mildly.Will European buyers be ready to accept such extensive future obligations in order to deal with a near-term problem? Perhaps, if things get bad enough. But it’s unlikely negotiations with sellers would be quick and easy.No one should make the mistake of thinking that because Qatar helped Japan when it abruptly lost or closed so much nuclear and oil-generating capacity after the Fukushima nuclear disaster a decade ago, it will do the same now. The volumes involved were smaller and Japan was Qatar’s best customer, consciously paying a premium to get security of supply. Europe, in contrast, is suing Qatar for infractions of its competition policy and has never been a steady buyer of its LNG.Think CarefullyAt this stage, some of the froth in global LNG prices is a political premium of the type more common in oil markets. Leading European politicians aren’t saying they plan to halt purchases of Russian gas in the foreseeable future — at least not yet. But speculation is rife that Russian gas won’t keep flowing freely — either by intent or because of difficulty in payments of the type already seen for oil, as banks balk at dealing with Russia.Some further reduction in Russian gas supply to Europe might be manageable if it doesn’t last too long. Because of its heavy use in heating buildings, gas is a more seasonal fuel even than oil, and Europe should be able to get a bit more spot LNG in the weeks ahead as winter recedes — although receiving terminals are close to full, so it won’t be much.Further bits of relief are possible in the near term, as the IEA suggests. Italy seems to have lined up a little more from Algeria — Europe’s third-largest supplier after Russia and Norway — and may turn a couple of mothballed coal-fired generating plants back on. More coal-fired capacity could be deemed usable for a while longer in other European countries, as well.For the medium term, some bits of domestic European production can perhaps be resuscitated or developed through tie-backs or other means that take advantage of existing infrastructure. But while these measures may get large play in the press, the volumes will be small. More significantly, Germany will likely delay its planned retirement of nuclear reactors, but this doesn’t ease the current situation, it simply prevents it from getting worse.It’s hard to think rationally in the midst of a whirlwind. But it’s vital to try. Signals to the oil and gas industry for the last decade that companies must shrink and basically eventually find something else to do for a living if they want to stay in business intensified during the pandemic. The industry can’t just turn on a dime into expansion mode. And meanwhile, the climate crisis seems certain to bring ever-fiercer waves of destructive weather, complicating both the making and the executing of decisions.Sarah Miller is a former editor of Petroleum Intelligence Weekly, World Gas Intelligence and Energy Compass.