The European Union has made significant progress to replace Russian natural gas, but an abrupt stop to pipeline flows could mean future U.S. LNG projects will be the key to rebalancing energy markets on the continent, industry groups highlighted in a new analysis.

In a new report by Rystad Energy AS, conducted for the American Petroleum Institute (API) and International Association of Oil & Gas Producers (IOGP), analysts found Europe’s demand for U.S. liquefied natural gas could outpace previous estimates from earlier in the year. With the assumption that flows on the Nord Stream 1 system – which have been halted since the beginning of the month – will be absent from the European market for the foreseeable future, Rystad predicted Europe’s demand for LNG is projected to...