The EU Gas Market in 2025: Trends and Price Forecast

13.08.2025

The EU gas market in 2025 continues to evolve, characterized by an active shift from Russian pipeline gas to liquefied natural gas (LNG), with an emphasis on diversifying sources. The total market volume is estimated at approximately €200 billion, with a tendency to grow due to demand recovery after its decline in 2022–2024. Notably, in the first half of 2025, the quantity of energy product imports decreased compared to the first quarter of 2024, but their value increased due to higher prices.

Market Structure and Consumption Trends

Regarding the market structure, gas consumption in the EU in the first half of 2025 decreased by 15.6% compared to the baseline period of the previous five years, due to high prices and the transition to renewable sources. An exception was the first quarter of 2025, when consumption grew by 8%, indicating a possible slowdown in the structural decline in demand seen since 2021.

Overall, the long-term trend is set to continue: by 2030, annual natural gas demand is expected to decrease by 7% to 302 billion cubic meters, with imports falling by 25%. The EU’s domestic production is declining annually by 5-10% due to the depletion of gas fields, which is compensated by imports.

It is fully expected that by the end of 2025, global LNG supply to the EU market will increase by 5.5%, largely thanks to new infrastructure projects in the US and Qatar. In the first half of 2025, LNG imports reached record levels, compensating for the reduction in Russian pipeline gas supplies: a growth of 23% or 9 billion cubic meters in the first quarter of this year offset the cutbacks in pipeline deliveries from Russia. On one hand, the aggressor state’s blue fuel accounts for about 13% of the pipeline supply balance, but on the other hand, imports of Russian resources via LNG have increased by 18%. In June 2025, the European Commission proposed legislation for a gradual phase-out, including a ban on new contracts from the end of 2025 and the termination of existing ones by 2027.

The Critical Issue of Russian Supplies to the EU Market: Natural Gas and Ammonia

The supply of Russian gas to the EU market must be stopped as soon as possible, as the aggressor receives about €1.25 billion monthly from the sale of this resource, which it uses to finance its unprovoked armed aggression and crimes against humanity. Simultaneously, it should be noted that the aggressor also supplies ammonia, which is produced from natural gas, to the EU market.

Unfortunately, in 2025, the forecasted supply volume of this product is expected to increase by 20% compared to the previous year, reaching 850,000 tonnes of ammonia. This is equivalent to 0.8 billion cubic meters of natural gas, but at a much higher price. For example, the index in the first half of the current year was $450 per tonne. Thus, the aggressor earns over $0.4 billion annually from ammonia exports to the European market, which underscores the need for urgent measures. This area must also be sanctioned.

Pricing Factors

Pricing in the EU natural gas market is a complex process that depends on a combination of global, regional, and local factors.

Geopolitics is one of the main drivers of price volatility. The second most significant factor is weather conditions. Recall the previous heating season, when a cold winter increased heating consumption, pushing prices up to €50/MWh. At the same time, in the second quarter of 2025, natural gas quotes fell due to a mild spring and low demand. Therefore, it can be assumed that an optimal temperature regime during the 2025–2026 autumn-winter period could keep prices stable, but one must be prepared for extreme weather changes to instantly add more than 10% to the indices.

The next influencing factor is global competition, which determines the balance of supply and demand. For instance, growing demand in Asia (China, India) competes with the EU for LNG, which drives up prices (the correlation between European and Asian prices has reached an all-time high). At the same time, an increase in LNG imports (up 20% in the first quarter of 2025) and Norwegian supplies are stabilizing the EU market, but pipeline maintenance can cause shortages. Therefore, special attention should be paid to information from gas transmission system operators about planned preventive works.

A restraining factor on price growth will be the level of blue fuel reserves in EU underground gas storages. It is fully expected that by November 1, 2025, storage levels could reach 95% or more, which corresponds to the 2024 level (~100 billion cubic meters, or a third of the EU’s annual consumption).

As of the first decade of August, price volatility remains high due to geopolitical risks, the energy transition, and global competition for resources. The main benchmark is the TTF (Netherlands) at ~€32-33/MWh, with which other hubs are correlated. Prices are generally stable but with a downward trend (1-2% daily, 5-7% monthly) due to high gas reserves in the EU (about 90% full), increased LNG imports, and moderate demand. More details are provided in the table below.

Table. Price Comparison (as of August 11-12, 2025, day-ahead/spot, EUR/MWh)

For the fourth quarter of the current year, we should expect an increase in quotes to €45/MWh due to the heating season. The final index will be influenced by geopolitics (Asian competition for LNG), weather (a mild summer reduces demand), and regulations (the German cancellation of the storage levy will lower prices). As a result, hub liquidity will increase, and TTF will strengthen its position as a global benchmark.

Infrastructure Changes and Their Impact

From the perspective of long-term natural gas procurement planning in the EU, it is necessary to consider infrastructure projects that will have a significant impact on the design of the European market. This refers to the REPowerEU strategy, according to which the EU plans to transition to decarbonized gas, which includes significant infrastructure changes. These changes are aimed at diversifying supplies, completely abandoning Russian gas, and integrating renewable sources.

The main projects include the expansion of LNG terminals, new pipelines, interconnectors, storage facilities, and the transition to hydrogen. They will affect the physical flows of gas, shifting the focus from eastern pipelines to western and maritime routes, as well as prices at hubs (e.g., TTF, THE, PSV), potentially stabilizing them in the long term, but with the risk of short-term volatility and increased tariffs for supply services.

In Lieu of Conclusions

In my subjective opinion, natural gas importers should consider and evaluate the following recommendations. First, enter into long-term contracts based on a formula model with several suppliers at once to ensure flexibility. Second, use hedging instruments on hubs like TTF or THE to fix prices. Third, analyze the feasibility of purchasing natural gas from Norway and LNG from terminals in Poland (Świnoujście) or Lithuania (Klaipėda).