EU still imports record volumes of liquefied natural gas (LNG) from Russia

Despite a target of ending dependence on Russian fossil fuels by 2027, EU countries spent nearly 5.3 billion euros ($5.7 billion) on more than half of Russia's total liquefied natural gas (LNG) exports in the first seven months of 2023, with Spain and Belgium the second and third largest customers worldwide (after China), according to estimates by the non-governmental organization Global Witness.

Global Witness' analysis published on August 30, based on data from analytics firm Kpler, showed that EU imports of this super-cold gas increased by 40% in the period from January to July this year compared to the same period in 2021, before Russia launched its military campaign in Ukraine.

The spike is due to the fact that the EU did not import much LNG before the conflict, as it relied more on pipeline gas from Russia. But the increase is much stronger than the global average increase in imports of Russian LNG, which was 6% over the same period, Global Witness said.

World - EU still imports record volume of liquefied natural gas (LNG) from Russia — Yamal LNG joint venture in the Russian Arctic. Photo: Novatek

Additionally, the analysis shows that the EU is importing about 1.7% more Russian LNG than when imports hit a record high last year.

“EU countries have gone to great lengths to wean themselves off Russian fossil fuels only to replace pipeline gas with the equivalent delivered by ship,” said Jonathan Noronha-Gant, a senior fellow at Global Witness. “Whether it comes from pipelines or ships – it means European companies are still funneling billions into the Kremlin’s war chest.”

Most of Russia’s LNG is produced at the Yamal LNG joint venture, majority owned by Russia’s Novatek. Other stakes are held by France’s Total Energies, China’s CNPC and a Chinese state fund. The joint venture is exempt from export duties but is subject to income tax.

As well as bringing in billions of euros in revenue for Russia at a time when the EU continues to tighten sanctions against Moscow, the record LNG imports could leave the continent in trouble if LNG supplies are suddenly cut off, as happened to pipeline gas last year.

“Long-term buyers in Europe have said they will continue to take contracted volumes unless they are banned by the government,” said Alex Froley, senior analyst at consultancy ICIS.

The EU import ban will cause some disruption in shipping as global trade patterns will need to be re-arranged, Mr Froley said, adding that Europe could eventually find other suppliers and Russia could find other customers.

World - The EU still imports record volumes of liquefied natural gas (LNG) from Russia (Figure 2). — The Fluxys LNG terminal in Zeebrugge, Belgium. Photo: Brussels Times

The EU has set a target of phasing out Russian fossil fuels by 2027, but officials in the bloc have warned that a complete ban on LNG imports risks triggering an energy crisis like last year when gas prices in Europe hit a record high of more than 300 euros/MWh.

Although gas storage in Europe is more than 90% full ahead of winter, it is still “very worrying” if supplies are cut further, an EU official told the Financial Times.

Russian LNG accounted for 21.6 million, or 16%, of the EU's total 133.5 million cubic metres of LNG imports (equivalent to 82 billion cubic metres of natural gas) in the January-July period this year, Kpler data showed, making Russia the bloc's second-largest LNG supplier, behind only the United States.

The EU must cut demand by another 10%, said Henning Gloystein, director of energy, climate and resources at Eurasia Group. “If we don’t systematically reduce gas consumption by 10-15%, we risk a repeat of the annual race for supply,” Gloystein said .

Minh Duc (According to Financial Times, Global Witness)

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