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The European Union will import a record amount of liquefied natural gas from Russia this year, even as the bloc aims to wean itself off Russia’s fossil fuel by 2027.
Belgium and Spain were the second- and third-biggest buyers of Russian LNG in the first seven months of this year, after China, according to an analysis of industry data by NGO Global Witness.
Overall, EU imports of ultra-refrigerated natural gas rose 40% between January and July this year compared to the same period in 2021 (before Russia’s full-scale invasion of Ukraine).
The increase came from a low base because the EU did not import much LNG before the Ukraine war due to its dependence on pipeline gas from Russia.
But Global Witness said the increase was well above the global average increase of 6% in Russian LNG imports over the same period.
The NGO’s analysis was based on data from industry analyst firm Kpler, which showed EU imports of Russian LNG rose by around 1.7% from last year’s record high.
The cost of importing LNG, at spot market prices, amounted to 5.29 billion euros between January and July, Global Witness said.
Jonathan Noronia-Gantt, senior fossil fuel campaigner at Global Witness, said: “It is appalling that EU countries have worked so hard to wean themselves off their dependence on Russian pipelined fossil gas, only to replace it with transported equivalents. It.” “Whether it’s from pipelines or ships — it still means European companies are feeding billions of dollars into (Vladimir) Putin’s war chest.”
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Most of Russia’s production comes from the Yamal LNG joint venture, which is majority-owned by Russia’s Novatek. Other shares are held by France’s Total Energy SA, China National Petroleum Corporation and a Chinese state fund. The business is exempt from export tax, but is subject to income tax.
Not only are billions of euros in revenue flowing to Russia as the bloc continues to tighten its sanctions regime against Moscow, the level of imports puts the bloc at risk of a sudden decision by the Kremlin to cut supply, as it did with pipelines. Gas last year.
“Long-term buyers in Europe say they will continue to accept contract volumes unless politicians ban them,” said Alex Froley, senior LNG analyst at consultancy ICIS. The EU import ban will cause some disruption to shipping as global trade patterns need to be rearranged, “but eventually Europe can find other suppliers and Russia can find other buyers,” he added.
Belgium imports large quantities of Russian LNG because its port of Zeebrugge is one of the few transshipment points in Europe for LNG from ice-class tankers used in the High North to general cargo ships.
Spanish utility Naturgy and France’s Total have also continued to sign large contracts for Russian LNG, analysts said.
EU policymakers have been urging European companies not to buy Russian LNG.
Spanish Energy Minister Teresa Ribera, whose government holds the six-month EU presidency, said in March that LNG should be subject to sanctions, calling the situation “ridiculous”.
EU Energy Commissioner Kadri Simson said the bloc “can and should move away from Russian gas completely as soon as possible, while still keeping our security of supply in mind”.
EU officials pointed to phasing out Russia’s fossil fuel by 2027, but warned that an outright ban on LNG imports could trigger an energy crisis, just as EU gas prices hit record highs of more than 300 euros per megawatt-hour last year. .
While European gas storage tanks are more than 90% full ahead of winter, people remain “very nervous” if supplies are cut further, an official said.
Kpler data show that of the total EU LNG imports of 133.5 million cubic meters (equivalent to 82 billion cubic meters of natural gas) from January to July, Russian LNG accounted for 21.6 million cubic meters, or 16%, making it the second largest in the EU. Suppliers of liquid fuels following the US.
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In March, energy ministers introduced a clause in new rules governing the EU gas market that would allow governments to ban Russian and Belarusian companies from booking capacity on EU LNG infrastructure in order to find a legal way to block imports.
But the proposal must first be negotiated with the European Parliament before it can take effect.
Henning Greustein, director of energy, climate and resources at Eurasia Group, said the chances of governments having to order industry shutdowns this winter due to gas shortages were “close to zero”.
The EU must cut demand by a further 10%, Groistan added. “If we don’t structurally reduce gas consumption by 10% to 15%, we risk repeating this (supply) race every year.”
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