Russia Supplies About 30% of Europe’s Long-Term LNG Contracts Ahead of 2027 Ban

Key Facts

Europe’s LNG market is preparing for a shift in supply routes as the halt to Russian LNG imports begins on January 1, 2027, a move the International Energy Agency says will end these imports entirely. Russian LNG accounts for about 30% of Europe’s long-term contracts, according to an S&P Global estimate on November 11, 2026. Finding replacement cargoes will therefore come into focus as the ban takes effect during winter. The departure of Russian volumes from the European market does not mean they will disappear from the global market; S&P Global says the ban will change the destination of those potential cargoes. Some volumes may head to Asia as Europe seeks alternative supplies.

China is the clearest destination for Russian cargoes that are redirected, particularly if they are offered at discounted prices, S&P Global says. But the cargoes’ destination alone will not determine the ban’s effect on the balance between the two markets; competition will depend on Europe’s and Asia’s needs for flexible cargoes. In a colder-weather scenario, Europe may need larger volumes of LNG at a time when Asian demand may also rise, intensifying competition for available cargoes. S&P Global said that, in this scenario, Europe would need to bring significantly more LNG into the region as Asian demand could also increase. The firm identified December and January as the key period for buyers to compete for additional cargoes during the 2026-2027 winter.

The scale of the supply shift is reflected in the International Energy Agency’s estimates for the period between 2025 and 2028: it expects the regulation to cut Russia’s pipeline gas and LNG shipments to the European Union by about 33 billion cubic meters a year. The EU’s reliance on Russian gas had already fallen from nearly 40% of demand in 2021 to about 10% in 2025, according to the agency. Over the same period, LNG’s share of European demand rose from less than 20% to nearly 45%. The shift reflects LNG’s growing role in Europe’s supply mix alongside reduced reliance on Russia. The agency also sees the reduction in Russian supplies opening market share to other suppliers.

Contract and transport arrangements limit how quickly Russian volumes can be redirected to Asia. The European Union imported 14.94 million metric tons, equivalent to 20.3 billion cubic meters, from the Yamal LNG project in 2025, with about 70% of those volumes tied to long-term contracts, Reuters reported. The agency cited a Wood Mackenzie analyst’s estimate that a maximum of 1.7 million tons could be redirected from Europe to Asia during the remainder of 2026, or about 1.7% of the EU’s LNG imports in 2025. The analyst called this the “maximum possible” diversion away from Europe during that period. Shipping constraints add another factor: specialized ARC7 vessels can usually navigate the Northern Sea Route from July to late November. Outside that window, cargoes bound for Asia may take the Suez Canal or Cape of Good Hope routes, which can take twice as long, depending on the route.

To maintain export levels and serve Asian customers from 2027, Novatek, the operator and largest owner of the Yamal project, may need to charter 25-35 additional vessels during the winter season, according to an estimate by a shipping analyst cited by Reuters. That puts vessel availability and the cost of longer voyages among the factors affecting Russia’s ability to redirect cargoes. S&P Global expects rising demand for seaborne transport to push freight rates higher in the first quarter of 2027. It also pointed to a large number of new vessels entering the market in 2027, which could ease some pressure. The firm said that “higher demand for shipping may also contribute to an increase in transportation rates during the first quarter,” as the impact of new vessels remains to be seen.

Attention will now focus on purchasing and contract decisions ahead of the ban’s implementation. Buyers will track contracting activity in the first quarter of 2027, alongside discussions on annual delivery programs held toward the end of 2026, S&P Global says. These decisions may coincide with peak competition for flexible cargoes in December and January, particularly if cold weather in Europe coincides with stronger Asian demand. Meanwhile, the destination of Russian cargoes to Asia will depend on buyers’ preferences and pricing terms, including the possibility of offering them to China at a discount. The International Energy Agency sets the end date for Russian pipeline gas at no later than November 1, 2027, with the ban able to begin on September 30 if storage targets are met.