Increased global reliance on natural gas is upending energy geopolitics and enabling new actors to take leading roles.
Few events in recent years have proved to be as transformative of international relations as Russia’s invasion of Ukraine and the resulting imposition of sanctions on the Russian economy. The war and sanctions have sundered or sharply curtailed most remaining trade and diplomatic relations between Russia and the West, forcing Western firms to suspend their operations in Russia and plan for a world divided into highly segmented trade blocs.
All this has come about because European leaders, over the course of many decades, chose to rely on the mammoth oil and gas reserves of Russia to supply their countries with affordable energy for industry, home heating and electricity generation. Russian gas imports have become especially important in recent years as the European Union has sought to reduce its reliance on coal and nuclear power .
Obtaining additional gas imports, however, will pose a greater challenge. Natural gas can be delivered by pipeline, but most of Europe’s piped gas comes from Russia, and the construction of alternative conduits, say from North Africa or the Caspian Sea area, will take many years.
A comparison of the top five oil and natural gas producers is useful in highlighting this power shift. To begin with, the LNG trade is highly concentrated: While the top five exporters of oil — Saudi Arabia, Russia, Iraq, the United States and the United Arab Emirates — account for approximately 50 percent of global exports, the top five suppliers of LNG — Qatar, Australia, the U.S., Russia and Malaysia — account for 70 percent of such exports.
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