Russia’s indefinite closure of the NordStream 1 natural gas pipeline to Europe on Sept. 2, 2022 has led to liquid natural gas (LNG) shortages and high prices in Europe. The resulting energy crisis threatens to depress economic output and snarl supply chains, especially of natural gas-dependent industries in Europe and possibly beyond. Europe may, to some extent, replace Russian gas with alternative sources (such as from the U.S.), stockpile sufficient reserves, and build enough import capacity to ensure natural gas is available, but may nonetheless face high prices through 2023.

high gas prices
EU natural gas import prices, USD/MMBtu (YCharts)

Supply Chain Impacts

NordStream 1 is the largest pipeline for Russian gas to Europe, though other pipelines remain open. The energy crisis will impact European industrial capacity in key industries like steel, chemicals, ceramics, glass, and fertilizers. There may also be spillover effects, including recession, high energy prices in Asia, and increased likelihood of political unrest.

Reduced Production Capacity of Key Industries

fertilizer prices
Fertilizer prices (World Bank)

Shipping Constraints

Europe faces constraints due to a shortage of available tankers. LNG must be delivered onshore through terminals via specialized tankers that require, on average, 2.5 years to build, with no free major shipbuilder capacity to take on new orders until 2027. Almost no tankers are available to increase deliveries to Europe, and shortages of available tankers may continue through 2025. Even as Europe funds installation of new LNG terminals through 2023, some import capacity may remain idle due to expansion outpacing the ability of producers and shippers to deliver.


The LNG shortage combined with inflation-curbing measures could contribute to a recession in European countries with Russian LNG dependency. Multiple projections forecast mild negative Euro area growth rates through at least Q2 2023. Recessions can have a persistent effect on production as companies reduce overhead, capacity, and investment. Limited availability of energy or persistent high energy prices can also force critical industries to cut costs and lay off workers, idling capacity and losing expertise that may take a long time to regain.

Knock-on Effects on Global Energy Prices

Increased Public Dissent, Protests, & Political Impact

European Policy Response

Europe is pursuing multiple avenues to minimize the effects of low natural gas availability and high prices, with the expectation that NordStream 1 will remain closed without a settlement to the war in Ukraine and the EU will continue to reduce its reliance on Russian natural gas. Analysts at Goldman Sachs project that these policies will successfully reduce gas prices and limit the energy crisis’ effects in Q1 2023, assuming reduced energy demands.

How Exiger Can Help Identify European LNG Exposure

Exiger’s Supply Chain Explorer illuminates supply chains to the Nth tier and identifies direct and sub-tier suppliers operating in LNG-reliant industries. DDIQ, our award-winning technology platform, can also provide early warning signs for companies that may experience financial or operational stress. They are invaluable tools for government agencies and private sector firms for evaluating exposure to a wide range of risks in the LNG supply chain.

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