...Shock Case: A ban on Russian gas imports to Europe stemming from a deepening of the Ukraine crisis is a low-probability, high-impact scenario. Risk premia would spike and undermine Europe's fragile recovery. We examine how Europe could replace Russia's gas supplies in the short term, and the associated rating pressures on European corporate issuers. Countries Most at Risk: Europe's consumption of gas in 2013 was 533 billion cubic metres (bcm). Russia has increased its share of European gas supply from 19% to 27% since 2010, in part due to declining European demand and lower LNG imports. This is in spite of Europe producing around half of the gas it consumes. The countries most reliant on Russia for gas are those closest to it. Difficult to Reduce Demand: Fitch Ratings expects some reductions in demand for gas could be made as energy and gas-intensive industries shut down and households turn down their thermostats. However, we anticipate that imposing EU-wide demand restrictions on the 28...
