Europe Still Buys Russian Fertilizer While Banning Russian Gas
The European Union has slashed imports of Russian pipeline natural gas, committing in December 2024 to end them entirely by September 2027. What it has not cut is its purchases of fertilizer produced in Russia using that same gas — a dependency that sits awkwardly alongside the sanctions architecture and is drawing attention as input costs bite European agriculture.4
Before Russia's full-scale invasion of Ukraine in February 2022, Russia supplied roughly 30% of all fertilizers bought by European farmers.4 Fertilizer costs account for 15-30% of typical farm input budgets, and those costs rose sharply from 2020 to 2025 while grain and produce prices moved in the opposite direction.4 The margin squeeze has already fueled agricultural protests across northern Europe.
American natural gas prices present a potential counterweight. NYMEX Henry Hub front-month settled at $3.23 per MMBtu as of Friday's close (2026-06-26), against ICE Endex TTF front-month at €41.00. That spread — in excess of €37 per MMBtu — gives US-origin nitrogen fertilizers a meaningful cost advantage over product made in Europe on TTF-linked feedstock. The arithmetic is clear; the commercial pipeline is not.
Ukraine illustrates how thoroughly the upstream has been disrupted. Before the February 2022 invasion, the country had 120 fertilizer factories meeting roughly 70% of its nitrogenous fertilizer needs from 2020 baseline levels.4 Those plants ran on Russian natural gas or Russian ammonia, and the supply chains were severed when the full-scale war began.
The structural realignment of European gas supply has been substantial. EU pipeline gas imports from Russia fell by more than two-thirds from their 2020 peak of 14.7 billion cubic feet per day, dropping Russia's share of EU pipeline supply to around 8% by 2023, according to EU Commission data.2,5 But pipeline gas and fertilizer procurement are separated by different contracting chains, and European agricultural buyers have not faced equivalent policy pressure to diversify.
Azerbaijan cannot fill the gap left by Russia. Naftogaz has estimated that Baku can offer only around 2 billion cubic meters of the 14 billion cubic meters the EU previously received through the Ukrainian transit corridor, which halted on Wednesday (2026-05-13) when a prewar transit deal expired.6,5
US LNG exporters want to fill part of the supply shortfall, but they are asking the EU for concessions first. American suppliers have requested that Brussels push back enforcement of its methane emissions rules until at least 2028, arguing the regulations impose compliance burdens on production and export infrastructure that create uncertainty for long-term offtake contracts.3 Without that carve-out, Henry Hub-linked volumes may carry enough regulatory overhead to blunt their competitive edge.
Russia's own gas position is weakening modestly. Production fell 3.2% in the first half of 2025 compared with the same period a year earlier, reaching approximately 334.8 billion cubic meters, according to federal statistics data cited by Bloomberg.1 Russian LNG output dropped 5.1%, to around 16.5 million tons over that period. Power of Siberia pipeline exports to China are projected to rise more than 20% toward their maximum capacity of 38 billion cubic meters annually, pulling Russian supply further eastward.1
The EU has moved to raise tariffs on Russian fertilizers, but the Economist noted in May 2026 that the measure may not be sufficient to break the import dependency quickly.4 Member states without alternative procurement arrangements face a stark choice: pay more for non-Russian product, or continue subsidizing Russian export revenue through agricultural purchases.
The methane rules standoff is the near-term hinge. If the EU grants US LNG exporters a timeline adjustment, Henry Hub-linked supply could begin to anchor new fertilizer contracts at commercially viable terms. If it does not, European farmers may still be drawing on Russian molecules well after the September 2027 pipeline cutoff — paying above-market prices for an independence that exists only on paper.