Introduction

Two major gas supply crises in the last five years have fundamentally challenged long-held assumptions regarding gas supply security, exposing deep vulnerabilities in a geopolitically complex global market. The 2022-2023 energy crisis, sparked by the Russian Federation’s invasion of Ukraine, triggered record price spikes and an unprecedented reconfiguration of trade flows. These risks were further emphasised in 2026 by disruptions to liquefied natural gas (LNG) flows through the Strait of Hormuz, affecting exports from major suppliers like Qatar. While the market is expected to enter a period of greater abundance in the late 2020s, the resilience of gas systems cannot be taken for granted due to reduced supply flexibility and growing weather sensitivity.

A gas market in transition

The global gas market is undergoing a structural shift characterised by the erosion of traditional flexibility mechanisms. Between 2021 and 2023, Russian pipeline natural gas deliveries to Europe fell by approximately 125 bcm/yr, representing a decline of nearly 75%. European buyers responded by increasing LNG imports by more than 60% in 2022, drawing cargoes away from other markets. Geopolitical risks have intensified, as evidenced by the 2022 sabotage of the 55 bcm/yr Nord Stream 1 system and the 2026 Middle East conflict which heavily damaged LNG liquefaction trains in Qatar. Furthermore, trade fragmentation through international sanctions and tariffs, combined with weather-related disruptions like the 80% reduction in Panama Canal LNG transits in 2024, has added friction to global gas flows.

Flexibility options along gas and LNG value chains

Flexibility exists throughout the gas value chain, but is increasingly constrained. Upstream production flexibility has been reduced by the phase-down of production at the Groningen field in the Netherlands and the exhaustion of swing capacity in Norway. LNG liquefaction facilities offer limited operational flexibility, typically operating at 85% average utilisation between 2021 and 2025. Midstream flexibility mechanisms, including destination-free LNG cargoes and underground storage, are the primary focus for enhancing system resilience. Downstream demand-side flexibility, such as fuel switching, is becoming more limited as markets phase out coal, making midstream levers essential for responding to supply shocks.

Physical gas reserves

Physical reserves are a cornerstone of gas security, comprising underground gas storage (UGS), LNG tank storage, and floating storage units. Global UGS capacity totalled approximately 445 bcm at the end of 2024, though it is unevenly distributed, with North America and Europe holding 37% and 33% respectively. Developing new UGS is capital-intensive, costing between USD 500 million and USD 1 billion per bcm of working gas capacity, with lead times of five to seven years. LNG tank storage, while more expensive on an energy-equivalent basis, provides critical short-term buffering. Floating storage and regasification units (FSRUs) offer rapid deployment options, typically within 12 months if existing infrastructure is available, as demonstrated by Germany and Italy during the 2022-2023 crisis.

Flexible commercial options for LNG

Contractual flexibility improves the allocation of available gas without requiring new physical infrastructure. The share of destination-flexible LNG contracts increased from 29% in 2016 to 45% in 2024 and is projected to reach 52% by 2030. US LNG exports have been a major driver of this shift, as they generally lack destination restrictions and offer downward volume flexibility. However, legacy contracts still pose constraints; for instance, 40% of Japanese long-term contract volumes still had destination restrictions in 2024. Commercial innovations, such as call option-style contracts and joint procurement arrangements—like the partnership between JERA and EDF Trading—can enhance market resilience by pooling portfolios across regional markets.

Policy tools to create gas reserve mechanisms

Governments can employ several policy instruments to strengthen security. Mandatory storage obligations, such as the European Union’s Gas Storage Regulation, require facilities to reach 90% fill levels by November each year. Strategic underground gas reserves involve regulatory ringfencing of volumes for emergency use, currently adopted by at least ten EU member states including Italy, which held 4.6 bcm in 2025. Buffer LNG schemes, such as Japan’s Strategic Buffer LNG (SBL) and Singapore’s Standby LNG Facility (SLF), provide publicly backed contingency mechanisms to secure additional supply during acute market stress. Ireland is also developing a state-backed FSRU as a Strategic Gas Emergency Reserve (SGER) to protect against major supply disruptions.

Options to increase international cooperation

International cooperation is essential to managing supply shocks that propagate through interconnected markets. The report recommends deepening cooperation through the IEA’s Natural Gas and Sustainable Gases Security Working Party (GWP) and establishing industry advisory bodies to bridge the gap between policy objectives and commercial realities. Key recommendations include conducting regular emergency exercises, strengthening data transparency for gas stocks, and facilitating the removal of restrictive clauses in legacy LNG contracts. Voluntary mechanisms, such as a joint strategic gas reserve in Ukraine—which has 31 bcm of working gas capacity—and cross-regional buffer schemes between Europe and Asia, could further enhance global supply security.