EU phase-out of Russian gas creates new diversification opportunities for Central and Eastern Europe

The European Union aims to phase out imports of Russian natural gas by the fourth quarter of 2027, bringing to an end more than five decades of reliance on Russia for a substantial share of the bloc’s gas needs. The EU legislation was adopted in December 2025 and its implementation is already under way, with imports under short-term contracts prohibited since late April for Russian LNG – and since mid-June for Russian pipeline gas. Imports of Russian LNG are to halt completely by 1 January 2027, with remaining pipeline gas imports ending no later than 1 November 2027.

Overall, the regulation is expected to reduce Russian pipeline gas and LNG deliveries to the EU by around 33 billion cubic metres (bcm) per year between 2025 and 2028. Some of this can be absorbed by reductions in gas demand through enhanced energy efficiency and continued electrification, but it will also create market space for non-Russian suppliers, particularly in Central and Eastern Europe, where Russian pipeline gas remains an important source of supply.

The phase-out comes as global LNG supply is entering an unprecedented period of expansion, led by new liquefaction capacity in North America. This changing market environment presents Central and Eastern Europe with an opportunity to diversify gas supplies further by strengthening transatlantic LNG partnerships, while also expanding cross-border infrastructure and adopting more flexible procurement strategies. Together, these measures can help improve gas supply security and affordability across the region.

Since Russia’s full-scale invasion of Ukraine in 2022, the European gas market has undergone a profound transformation. The share of Russian natural gas in EU demand fell from almost 40% in 2021 to around 10% in 2025. At the same time, LNG’s share of demand grew from less than 20% to almost 45%, increasing the bloc’s exposure to global gas markets.

The decline has been driven primarily by the steep drop in Russian pipeline gas imports, which fell by almost 90%, or 120 bcm, between 2021 and 2025. This adjustment has been uneven across the EU: Northwest Europe and Italy have effectively eliminated imports of Russian pipeline gas, whereas several markets in Central and Eastern Europe continue to rely on Russian supplies. By contrast, imports of Russian LNG increased by over 40%, or 6 bcm, over the same period, with most of the growth concentrated in Northwestern and Southwestern Europe. 

Between 2021 and 2023, annual gas demand in Central and Eastern Europe declined by more than 20% as record-high prices weighed on natural gas use in industry. Demand has since partially recovered, increasing by around 10% between 2023 and 2025. In contrast with Western Europe, natural gas demand in Central and Eastern Europe is expected to continue to grow over the medium-term amid the continued phase-out of coal-fired power generation. The region has historically relied heavily on Russian pipeline gas, which accounted for around 60% of its primary gas supply in 2021. Although pipeline imports from Russia fell from 55 bcm in 2021 to just over 15 bcm in 2025, they still meet around 20% of regional gas demand.

Central and Eastern Europe’s continued diversification comes at a time of significant change in global LNG markets. Shipping disruptions through the Strait of Hormuz stemming from the war in the Middle East dealt a major supply shock to global natural gas markets, further highlighting the importance of diversified supply. Between March and July, LNG exports from Qatar and the United Arab Emirates fell by 43 bcm year-on-year, a decline equal to more than half of Germany’s annual natural gas consumption in 2025.

Even so, the impact of this supply shock on global markets has been moderated by the rapid expansion of LNG production elsewhere, as highlighted in the IEA’s latest quarterly Gas Market Report. LNG production outside the Persian Gulf grew by almost 16%, or over 30 bcm, year-on-year during the March-July period, offsetting around 70% of the decline in LNG deliveries from the Gulf. The strong increase was driven primarily by higher LNG output from new projects in North America and Africa, as well as improved availability of feedgas – used as a feedstock for LNG – from legacy producers in Africa and Asia.

While the outlook for shipping flows through the Strait of Hormuz remains highly uncertain today, more than 350 bcm per year of new LNG export capacity is projected to come online worldwide by the early 2030s, based on current project plans. The United States and Qatar together are projected to account for more than 70% of this expansion.

This unprecedented wave of new LNG supply is expected to ease tight market conditions and place downward pressure on gas prices over the medium term. For Central and Eastern Europe, it also creates an opportunity to replace remaining Russian pipeline supplies with a more diversified mix of LNG, provided sufficient infrastructure is available to move gas from import terminals to markets across the region.

The phase-out of Russian pipeline gas will require further adaptation of Central and Eastern Europe’s gas infrastructure, to enable larger volumes of non-Russian LNG supplies to reach regional markets. While LNG import capacity has expanded considerably between 2021 and 2023, growth has since plateaued amid constraints in moving regasified – or imported – LNG from coastal terminals to demand centres further inland, in addition to limited intraregional connections by pipeline.

Since the end of 2021, Central and Eastern Europe’s LNG import capacities have grown by around 15 bcm per year to nearly 35 bcm by the end of 2025 – representing over 40% of the region’s natural gas demand. This was accomplished by expanding Poland’s Świnoujście LNG Terminal, which added 3.3 bcm per year of send-out capacity to the market. Meanwhile, the Inkoo LNG regasification terminal – serving both Estonian and Finnish gas markets – started operations in January 2023, with a send-out capacity of 4.6 bcm per year.

In Southeastern Europe, the Alexandroupolis LNG terminal in Greece, with a send-out capacity of 6 bcm per year, started operations in October 2024. Croatia’s Krk LNG import terminal has also been further expanded, reaching a send-out capacity of 3.4 bcm per year in November 2025. Central and Eastern Europe can also benefit from expanded regasification capacities in Germany and Italy by leveraging regional interconnections.

Cross-border pipeline interconnections across Central and Eastern Europe have also improved substantially since 2022. This has facilitated intra-regional gas flows and indirect imports of LNG to landlocked countries, supporting gas security. The expansion includes the gas interconnector between Poland and Slovakia, the Greece–Bulgaria interconnector and upgrades to the Hungary-Slovakia and Hungary–Romania interconnectors.

In addition, existing south-to-north pipeline capacities need to be expanded to further strengthen the region’s energy security and could allow for a more efficient distribution of regasified LNG flows across the region. Transmission system operators are actively working on the Vertical Gas Corridor project, which would enhance south-to-north flows through the former Trans-Balkan pipeline system, allowing regasified LNG to travel from Greece up to Moldova and Ukraine. The pipeline system could enable around 10 bcm per year of transmission capacity and help strengthen supply security in Ukraine as Russian attacks continue to disrupt the country’s gas system.

Infrastructure alone will not be enough to reinforce regional supply security. In addition, flexible procurement strategies will be needed as Russian pipeline imports are phased out, including securing supply through diversified contracts and purchasing additional gas from an increasingly liquid global gas spot market.

Since 2022, European buyers have signed over 45 bcm per year of LNG import contracts, according to the IEA’s LNG contract database. Buyers from Central and Eastern European accounted for less than one-fifth of these contracted volumes. Based on existing supply contracts, Central and Eastern European buyers have secured only around 5 bcm per year of LNG supply by 2028 – accounting for just 5% of the region’s current gas demand. If no new contracts are signed, the region’s exposure to the global spot market – which is increasingly liquid but subject to volatility – would rise significantly.

A diversified portfolio, including long-term LNG contracts, can enhance gas supply security by providing greater visibility over future supply, while also limiting exposure to spot market volatility through sophisticated pricing formulae designed to reduce short-term price fluctuations. Destination-flexible contracts can also provide European buyers with additional commercial opportunities, without creating long-term supply lock-in. This will be essential to ensure relative price stability and supply security as Central and Eastern Europe phases out Russian piped gas imports after more than five decades of dependency.