No Laffan Matter
It was a no good, very bad week for the European Union.
“When it comes to luck, you make your own.” – Bruce Springsteen
Prior to the war in Ukraine, much of the European Union’s (EU) manufacturing competitiveness relied upon imports of approximately 15 billion cubic feet per day (bcf/d) of natural gas from Russia. Fast forward to 2025, and the EU has replaced much of this volume with comparatively expensive liquefied natural gas (LNG), predominantly from the US, Qatar, and Russia.
Yes, Russia. To the nearest whole number, of the roughly 14 bcf/d of LNG imported by EU countries in 2025, 2 bcf/d came from that country, accounting for about half of Russia’s total LNG exports.
Perhaps recognizing the absurdity of replacing dependence on cheap Russian fuel, in part, with expensive Russian fuel, EU leadership has been busy working to rid itself of Russian gas imports altogether, with plans to sanction the country further once the weaning is complete. This is from late January:
“Today, the 27 EU member states formally adopted the regulation on phasing out Russian imports of both pipeline gas and liquified natural gas (LNG) into the EU. The new rules also include measures on effective monitoring and diversification of energy supply…
According to the regulation, importing Russian pipeline gas and LNG into the EU will be prohibited. The ban will start to apply six weeks after the regulation enters into force. Existing contracts will have a transition period. This stepwise approach will limit the impact on prices and markets. A full ban will take effect for LNG imports from the beginning of 2027 and for pipeline gas imports from autumn 2027.”
The war against Iran, only a week old, is already shaping up to be one of the most significant geopolitical events of this generation, and the EU will by no means be excluded from its economic blast. A meaningful proportion of the world’s oil, LNG, refined fuels, fertilizer, and other critical materials is located on the wrong side of the Strait of Hormuz, which is effectively closed to shipping as of the time of this writing. Even if the Strait were to reopen tomorrow, it would not alleviate the shutdown of Qatar’s Ras Laffan natural gas export facility, one of the most consequential developments of the war thus far:
“Qatar declared force majeure on gas exports on Wednesday amid the US-Israeli war on Iran, with sources saying it may take at least a month to return to normal production volumes.
The move means global gas markets will experience shortages for weeks even in the unlikely scenario the conflict ends today, as Qatar supplies 20% of global liquefied natural gas.
State energy giant Qatar Energy (QE), which stopped producing gas this week, will fully shut down gas liquefaction on Wednesday, two sources familiar with the matter said. They asked not to be named because they are not allowed to speak to the media.
QE won’t restart the facility for at least two weeks, according to initial estimates of the situation in the region, the sources said. Once the restart decision is taken, it will take another two weeks to turn gas into a super-chilled fuel and reach full capacity, the sources added. The company did not respond to a request for comment.”
Although a global tightening of LNG would negatively impact many countries, including China, Japan, South Korea, India, and Taiwan, the 27 member states of the EU look set to feel the pain most severely. With significant dependency and few substitutes, the EU is on track for a repeat of the energy crisis that began in the spring of 2021 and catalyzed the shocking deindustrialization of its major economies. Worse still, both Russian President Vladimir Putin and US President Donald Trump have signaled possible moves that would exacerbate the EU’s developing crisis, albeit for different reasons.
Will the nightmare scenario befall Brussels? Let’s explore the possibilities.