No Russian gas flows via Ukraine in 2025? What are the options on the table for CEE countries?

Our first blog piece gave insight into how the European gas market has been going through a deep restructuring since the beginning of the energy crisis almost three years ago. The complete loss of Russian gas transiting through the Yamal and NordStream 1 pipelines, the reduction of Russian gas entering the EU via Ukraine, new pipeline developments in CEE countries, and additional LNG import infrastructure have reshaped the region’s gas market dynamics and politics.

Russia is currently transiting around 15 bcm/year of pipeline gas via Ukraine and this supply is at risk of ceasing from 1 January 2025 due to the end of the transit agreement between Russia and Ukraine, which is unlikely to be renegotiated. In our first blog, we observed that the stakes of losing this gas are diverse. We estimated that Slovakia, Austria, and Czechia face the highest energy security risk, while other countries such as Poland, Hungary, and Serbia are in a better place to weather what could be another disruption to Europe’s gas supply. Nevertheless, given the TTF’s relevance across the continent and the sharing of physical infrastructure, the whole region would be somewhat exposed to heightened risks.  

In this second blog piece, Kpler Insight dives into the options for CEE countries to replace such volumes via Ukraine in the event of a halt. Our assessment takes into consideration domestic demand and production trends, the availability of firm technical capacity between countries, and the addition/expansion of LNG and pipeline infrastructure in the short term. As we will explain in this blog piece, LNG stands as the primary option for the CEE region boosted by upcoming capacity additions. However, the debottlenecking of pipeline infrastructure in the South-North and West-East directions will be crucial for countries to succeed in the quest for energy security from 2025 onwards.

Azeri gas via Ukraine will not do the trick

The market has been talking for a long time about the alternatives in place to replace the loss of Russian gas supply next year. One option that the media often covers is to make Azeri gas transit Ukraine to reach the EU. Although political efforts are underway, Kpler Insight does not consider it as our base case. Our view is that not only can it be difficult to find a political compromise between the parties involved, but also Azerbaijan’s output potential is currently unable to make for the loss of Russian gas supply. Moreover, the fact that Azerbaijan also imports gas from Russia, could cast doubts about the origins of EU’s gas supplies and whether the region would be increasing its reliance on Russia. Although this would not be the first time that such controversy comes to light, it could become increasingly important considering the EU Commission’s objective to stop importing Russian gas in 2027.

Kpler Insight believes the EU has less risky alternatives to compensate for less Russian gas in the supply mix and pursue further diversification. Our view is that the region has the possibility to maximise the use of pipeline infrastructure currently in place and increase its LNG imports, all while addressing current debottlenecking issues to make sure gas reach the places where it will be needed most.

Maximising the use of existing pipeline import capacity

Reducing spare pipeline capacity could bring additional flexibility to the system. Here, we have identified some areas of opportunity that the region could tap into.

Market players could maximise the use of available firm technical capacity between Turkey and Bulgaria at the Strandzha/Malkoclar and Strandzha 2/Malkoclar IP interconnection points (IP) (see figure below). The former flows gas from the Turkish gas mix, and the latter is the entry point for Russian gas via the TurkStream pipeline. Increasing utilisation at these points could bring around 4 bcm of additional gas into the system if needed. It is worth mentioning that Turkey has expressed interest in increasing by three-to-four-fold gas transit capacity to Bulgaria at Strandzha/Malkoclar IP (see figure below), which currently stands at around 3.7 bcm. Although this could indeed provide access to additional volumes, especially from Turkish LNG, we do not think that this could materialise in the short term since it would require Bulgaria and Turkey to give non-discriminatory access to other parties and due to the challenge of verifying the actual origin of the gas flowing through the Turkish network, a point we raised earlier in the blog.

Another area of opportunity could come from higher utilisation of the Baltic pipeline into Poland, which has been flowing at 80% of its firm technical capacity so far this year. Increasing its output could make available up to 2 bcm of additional piped gas in the CEE region from Norway, although this could likely come, at least partly, at the expense of lower German piped imports from Norway. We do not see this as a problem given the current state of German gas demand, which we do not see recovering to pre-crisis levels.

We also see the pipeline flows from Italy to Austria at the Tarvisio/Arnoldstein IP (see figure below) to be another source of flexibility, however, our view is that most volumes flowing in this direction will be linked to Italy’s LNG imports, leaving much less room to see significant increases in pipeline imports from Algeria and Libya to reach CEE countries – we’ll cover this later in the blog. Lastly, imports of Azeri gas through the Kipoi IP, on the Trans-Anatolian Pipeline (Tanap), have been running at full technical capacity this year, we see, thus, limited upside opportunity though this corridor.

Kpler Insight’s assessment on total additional pipeline imports into CEE countries: 6 bcm

Selected LNG regasification terminal, pipeline interconnection points, and gas flows in the CEE region

Note: pipeline interconnectors have been numbered and referenced on the right side for easier visualisation.

LNG will be the safeguard, but not without enough interconnection capacity

LNG imports will be at the centerpiece of supply diversification strategy and energy security in the CEE region. Countries with LNG regasification facilities in place such as Poland, Croatia, Greece, Italy, and to a lesser extent Turkey, will play a pivotal role in providing landlocked countries in Central and Eastern Europe. In addition, LNG import terminals in Northwest Europe could also make available additional volumes, should enough firm capacity be available at key interconnection points, as we will discuss later.

Regarding specific regasification plants, Kpler Insight sees the terminals below as central elements for supply from 2025 onwards. We collected information related to firm technical capacity at each facility, capacity booking and holders, existing contracts for piped gas as well as our in-house forecasts on domestic production, consumption and underground gas storage. Our methodology allowed us to estimate the maximum export potential for a given country and, based on entry and exit flows and firm technical capacity in 2025 at key interconnection points, to determine how much of it could materialize as exports to CEE.  

• Croatia’s Krk terminal (see figure above), currently with a nameplate capacity of 2.9 bcm/y, is expected to expand it to 6.1 bcm in Q2 2025. Although Croatia still holds a contract with Gazprom for piped gas Gazprom until 2027, ENTSOG data shows that pipeline imports have steadily declined since 2022, with virtually no pipeline imports registered in 2024, suggesting that Croatia is covering most of its gas needs through LNG imports. This is not unthinkable given that Croatia remains poorly connected with Slovenia and Hungary and that only Croatian companies hold capacity at the Krk terminal. However, aiming to add more flexibility, the country has just started to import Azeri gas on 1 September 2024, although details on the volumes and the duration remain undisclosed. Domestic consumption in 2024 is expected to end at 2.1 bcm. We assume that storage withdrawals in the 2024-2025 winter heating season will be equivalent to those seen during the 2020-2021 winter period to partly account for the potential return of a colder winter season. Accounting for domestic production, net domestic gas needs in Croatia for 2025 would be around 1.8 bcm. Kpler Insight analysis shows that Croatia’s maximum export potential could be close to 4.3 bcm in 2025 considering no infrastructure constraints. However, as we just mentioned, interconnection capacity from Croatia to neighboring countries remains constrained. Firm technical capacity between Croatia and Slovenia at the Rogatec IP stands at 0.26 bcm/y while the capacity with Hungary at the Dravaszerdahely IP is around 1.7 bcm/y. Additional infrastructure is currently being developed with the objective to increase firm capacity to 1.5 bcm/y and 3.5 bcm/y to Slovenia and Hungary, respectively. Although the new capacity was expected to come online in Q2 2026, the project’s operator, Pinalcro, has said the commissioning of the new pipelines could happen as early as Q4 2025, just in time for the winter period 2025-2026. Taking this into consideration, the actual volume available from exports from Croatia into the CEE region in 2025 is estimated to be at 1.9 bcm and a maximum of 4.3 bcm in 2026.

• Greece’s Revithoussa & Alexandroupolis LNG import terminals (see figure above), with nameplate capacities of 5.6 bcm/y and 7.1 bcm/y, respectively. In addition to LNG capacity, the country also has long-term pipeline contracts with Azerbaijan and Russia currently in place. We expect Greece to continue to import the 1 bcm/y of Azeri gas through to 2027. However, in the case of Russian gas, no capacity has been booked for the gas year 2025-2026 at the Kulata/Sidirokastron IP, where gas from Turkstream meets the Greek grid. At the moment of writing, the booking of firm capacity is being maxed out at 3.75 bcm for the current gas year. If Greece continues to import Russian gas for the following gas years, or at least until 2027, more LNG volumes could be made available for exports into the CEE region. Otherwise, the country could easily rely on its vast LNG capacity and the Azeri contract to meet its gas needs. With this in mind, and using the same balancing methodology previously applied to Croatia, we obtained that Greece’s maximum export potential in 2025 (considering no infrastructure constraints) could be as much as 10.75 bcm/y (and 7.9 bcm/y in 2026) if Russian piped gas imports stop from October 2025 onwards and of 11.6 bcm/y if imports continued at least through to 2027. However, just like in the case of Croatia, Greece’s pipeline capacity with neighboring countries, especially with Bulgaria, currently stands significantly below the country’s export potential. The IGB interconnector, where Azeri gas enters the Bulgarian grid from Greece, has a firm technical capacity of 3 bcm/y, only slightly higher than the roughly 2 bcm/y of that available at the Kulata/Sidirokastron IP (direction Bulgaria). Expansion plans of the IGB are currently in development and have the objective to increase capacity to 5 bcm/y, potentially from 2026 onwards. This will leave Greece’s actual export potential for 2025 reduced to much less than 5 bcm/y considering that the IGB interconnector sends Azeri flows to Serbia and Bulgaria (~1.4 bcm/y) and Hungary. Our estimates for 2025 are that Greece could export up to around 3.5 bcm.

• Poland’s Świnoujście terminal, with its 6.2 bcm/y of nameplate capacity (see figure above). Additional Polish supply comes mainly from the Baltic pipe, which originates in Norway, as explained before, and domestic production. Our analysis indicates that Poland’s potential for exports into other CEE countries remains limited, especially in the event of a colder winter. Most of the capacity available at Świnoujście is booked by the national champion Orlen and its subsidiaries. Given that Polish demand could go above the 21 bcm mark in 2025, it is likely that most forms of supply are used to meet local demand. This could well be the reason why the 4.6 bcm/y of firm capacity available with Slovakia at Vyrava IP remains widely unused. The main option for Slovakia would be to import gas from Lithuania, through the Klaipeda LNG import facility and transit it through Poland via the 1.9 bcm/y Satanka IP to then enter Vyrava. Another factor contributing to low export potential is its poor connectivity with Czechia, limiting the opportunity to send gas there in the short term. Our estimate for 2025 is that net exports from Poland could be capped at 1 bcm/y.

• Italy’s LNG terminals, not including the installation in Sardinia, represent around 22 bcm/y of capacity in 2024, with the possibility of boosting it to around 27 bcm/y in 2025 with the addition of the 5 bcm/y at the offshore Ravenna facility (see figure above), anticipated to come online early next year. Italy could offer some of this gas for exports into the CEE region through the Arnoldstein/Tarvisio interconnection point with Austria. Barely used this year, the interconnection point offers around 6 bcm/y of firm capacity to Austria, of which 5.4 bcm have already been booked for the 2024-2025 gas year. Our view is that, in the event of a cold winter period where countries in the region will need to tap more into their underground gas stocks than in the previous two years, flows from Italy to Austria will increase in the April-September period with the aim to replenish Austrian and Slovak inventories. A maximum of 6 bcm could transit at this point in 2025 depending on Italian domestic demand and the availability of deliveries from Algeria, Norway (via Switzerland), and Azerbaijan.  

• Imports via LNG terminals in Western Europe. In their quest to diversify their imports and secure supplies, it is likely that countries in the CEE will get gas from LNG facilities in NW Europe. An example of this comes from CEZ Group, which has already booked capacity at Netherlands’ 12bcm/y-Gate regasification terminal. Germany will also serve as another source of flexibility in this regard. However, the major risk we see for this option is the potential congestion that could occur at key interconnection points, which could significantly limit the potential of gas that could be sent to the CEE region. For instance, this could be the case at the Brandov IP between Germany and Czechia (see figure above). Gascade, a German transmission operator, has reduced the availability of firm technical capacity for 2025 to around 10 bcm from around 50 bcm before the energy crisis. Part of the reduction is justified after the loss of NordStream 1 flows in 2022. Gascade has evoked that current flows are way far from reaching 10 bcm/y, however, we think this could be misleading as German gas exports remain low mostly due to the now 2.5 euros/MWh storage levy that will be in place until the end of the year. Also, countries like Austria, Slovakia, and Czechia, as we explained in our first blog piece, are still sourcing gas from Russia via Ukraine, which will likely not be available in 2025. Our analysis shows that, in the event of a really cold winter, Czechia’s net gas needs could go above 9 bcm in order to replenish their storage levels, leaving small room for gas to reach Slovakia and other countries in the region. Another option in place for CEE countries to get gas from NW Europe is through Austria. The country’s OMV has also booked capacity at Netherland’s Gate LNG terminal and expects to import gas through the 7.6 bcm/y Oberkappel IP between Austria and Germany potentially using the MEGAL pipeline system. However, even though Austria will likely be able to satisfy its net demand needs, that we expect to go around 12 bcm if winter 2024-2025 ends up being as cold as the one in 2021-2022, by making use of the MEGAL system, and imports from Italy, additional infrastructure works in the WAG pipeline connecting with Baumgarten IP will need to be finished, before significant extra gas can go through other CEE countries. At the moment, entry capacity to Slovakia at Baumgarten stands at around 8 bcm; we estimate that the country could make use of up to 3 bcm/y though this interconnection point along with imports from Hungary to satisfy its net gas needs.

• Turkey’s vast network of LNG terminals (some of them displayed on figure above) could provide some flexibility to the gas system in SE Europe. This gas would transit the Strandzha (BG) / Malkoclar (TR) IP between Turkey and Bulgaria, which holds a firm capacity of 3.7 bcm/y and is not currently fully used at the moment. We have already accounted for this when estimating additional imports that could come via pipeline from other countries.

All in all, our analysis shows that CEE countries have enough optionality to deal with the loss of Russian gas via Ukraine, even in the case of a cold winter. LNG will play a pivotal role in securing gas flows, however, its impact will be constrained by how quickly interconnecting pipeline capacity could be made available in 2025. It is important to mention the new additional volumes will likely be more influenced by LNG pricing dynamics across the globe as well as the evolution of tariff costs across the system. In any case, with additional LNG supply expected to be available in H2 2025 as new liquefaction plants come online and ramp up, and with the materialisation of infrastructure projects within the next couple of years, the EU will be in capacity to significantly reduce the risks of gas supply going forward.

All the content within this blog comes from LNG Insights.

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