It is now amid geopolitical tensions between the US and Europe. The United States’ fresh sanctions on the pipeline are indicative of a wider strategy aimed at undermining Russia’s energy dominance in Europe, particularly following its attack on Ukraine. Therefore, studying the impact of renewed sanctions on Russian gas exports to European markets in 2024 would be important.
Fresh Sanctions on Nord Stream 2
Liquefied natural gas (LNG) is too important to be ignored in Europe. In the aftermath of the energy crisis caused by Russia’s invasion of Ukraine, European countries quickly realized that their dependence on Russian gas was a significant vulnerability. Meanwhile, US sanctions targeting the Nord Stream 2 project significantly increased following Russia’s military actions in Ukraine. In December 2019, the US Congress adopted Protecting Europe’s Energy Security Act (PEESA) to punish companies involved in the construction of the Nord Stream 2 project. These sanctions were mainly aimed at weakening Russia’s capacity to skirt around traditional transit routes, particularly via Ukraine, thereby bolstering European energy security while weakening Russia’s bargaining power.
After the outbreak of the war on Ukraine in February 2022, the Biden Administration adopted a more aggressive position against the pipeline. He blocked certification for the project, laying the blame on Russian military activities. Subsequent legal action led to broader sanctions that targeted not only pipeline operators but also shipping companies, insurance providers, and other entities associated with the project.
In 2024, the sanctions regime expanded to include fresh punishment for Russian entities involved in the energy sector, including the Nord Stream 2 project, and maritime transport bodies. The sanctions were aimed at creating a more comprehensive obstacle in the way of Russian energy exports and were indicative of current geopolitics as Western governments were seeking Russian economic isolation.
Fallout for Russian Gas Exports to Europe
The tightening of US sanctions on the Nord Stream 2 pipeline had an immediate and significant impact on Russian gas exports to Europe. The sanctions not only halted the pipeline’s operation but also contributed to an overall reduction in Russian gas supplies to European countries. By 2024, data shows that Russian gas exports to Europe will have fallen by more than 55% from pre-attack levels, reflecting the cumulative effects of ongoing sanctions and Russia’s escalating military operations in Ukraine.
The Nord Stream 1 and 2 pipelines, which were expected to double Europe’s gas supply, were largely rendered unusable after incidents in 2022 that damaged vital infrastructure. As a result, European countries faced severe gas shortages, with governments looking for alternative sources of supply and trying to secure liquidity through increased imports of LNG from the US and other global suppliers.
In response to these developments, the EU took aggressive steps to reduce its dependence on Russian energy, including efforts to diversify suppliers and increase investment in renewables. The EU’s share of gas imports from Russia fell from around 40% in early 2021 to around 15% by late 2023, a trend that significantly changed the continent’s energy outlook.
US Gas Exports Rise
The most important aspect of America’s contribution to Europe’s energy supply is the country’s dramatic increase in LNG exports. After the tightening of sanctions on the Nord Stream 2 pipeline, US liquefied natural gas exports to Europe increased sharply, making the US a major energy supplier. In 2022, US LNG exports to Europe exceeded 75 bcm, up 137% year-on-year.
By 2024, the US supplied more than 50 percent of Europe’s total LNG imports, a shift that fundamentally transformed the way Europe supplied energy. This shift was facilitated by the development of a vast network of LNG terminals and regasification facilities in Europe, built to accommodate the increased imports.
Moreover, the geopolitical importance of the US’s role in supplying Europe with energy signals a shift in global energy politics. A shift towards US LNG would fundamentally alter the balance of energy relations, reducing Europe’s previous dependence on Russian gas and potentially reshaping energy supply chains on a global scale.
Long-Term Fallout and Future Perspective
The US’s tougher sanctions on the Nord Stream 2 pipeline have had profound implications for Russian gas exports to Europe. The long-term implications of the tightening of US sanctions on the Nord Stream 2 pipeline and its impact on Russian gas exports to Europe are therefore multifaceted. Faced with the loss of Russian gas supplies, countries are significantly investing in renewable energy infrastructure and alternative gas sources, which is changing the energy security paradigm in Europe.
Reducing dependence on Russian gas will not only have a detrimental impact on Russia’s revenues – which are expected to be severely affected by sanctions – but may also change the geopolitical landscape in the future. As Europe becomes more energy independent, it may reduce Russia’s influence and bargaining power over its neighbors, especially Eastern European countries that were previously heavily dependent on Russian energy imports. Increasing energy diversification, coupled with strong policies promoting renewable energy, is therefore likely to continue as a strategic priority among European countries.
Shuaib Bahman
International Affairs Expert
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