Europe is importing a record amount of seaborne Russian gas, highlighting how the region has not completely shaken off its dependence on the country for the crucial fuel even as flows through pipelines have all but stopped.
Imports of Russian liquefied natural gas, which is typically transported on big tankers, rose more than 40 per cent between January and October this year, compared with the same period in 2021, highlighting the difficulty for Europe in weaning itself off gas from Moscow despite Brussels’ attempts to shift away from Russian sources.
Russian LNG made up 16 per cent of European seaborne imports during the period. While the total volume of 17.8 billion cubic metres represented a fraction of the 62.1 bcm pipeline gas flows during this time, it nevertheless leaves Europe exposed to Vladimir Putin’s weaponisation of energy.
“One day, Putin could wake up and say, ‘we’ll stop sending LNG to Europe’, forcing the region to buy from an even more expensive spot market,” said Anne-Sophie Corbeau, global research scholar at the Center on Global Energy Policy at Columbia University.
Russia could also divert the cargoes to LNG-starved countries such as Bangladesh and Pakistan at cheap prices to “achieve political gains” and “put pressure on Europeans”, she added. “It’s very important not to forget that a lot of countries are suffering, because they cannot afford LNG.”
There are no sanctions on Russian gas, owing to its importance to some European nations’ energy security. The Kremlin has taken advantage by gradually reducing the flow through pipelines after the invasion of Ukraine, boosting prices and fuelling a cost of living crisis across the continent.
Gas flows through the Yamal pipeline, which runs through Poland, have been halted since May, and Russia cut flows through the Nord Stream 1 line to Germany in the summer. The pipeline later ruptured, in what some European countries alleged was a deliberate act of sabotage.
Russia has also recently threatened to restrict supplies to western Europe through the only pipeline still connecting the region through Ukraine. Pipeline gas from Russia is nearly 80 per cent down compared with the same period last year, according to data from think-tank Bruegel.
In order to fill the gap, Europe, which last year imported 155 bcm of Russian natural gas, including LNG, has turned to the international LNG market. It imported a record 111 bcm worth of LNG globally between January and October, data from Refinitiv showed, an increase of nearly 70 per cent year on year.
Imports from Russia during the period amounted to 17.8 bcm, rising 42 per cent compared with the same period in 2021, with France, Belgium, Spain and the Netherlands taking up almost all the volumes.
Most Russian LNG comes from the Yamal LNG joint venture, which is majority owned by the Russian company Novatek, with other stakes held by France’s Total, China’s CNPC and a Chinese state fund. Slightly less than 10 per cent of Novatek shares are owned by Russia’s state-owned Gazprom.
In another sign of Europe’s ties with Russia, a large ship carrying LNG from the Portovaya facility near Russia’s southern border with Finland arrived in Greece last month, according to satellite data analytics company QuantCube. This would mark the first shipment by the Portovaya project, which began operating earlier this year.
Since 2017, the country has been a top-three source for Europe, accounting for about 20 per cent of its total imports in the past three years. Russia has been the second-largest source this year, according to Refinitiv, but its share has dipped to 16 per cent despite the record imports as Europe has taken in more US LNG, which accounted for 42 per cent. Qatar was the third-largest LNG supplier to Europe, accounting for 13.7 per cent.
“My somewhat cynical take is if we buy LNG from Russia, that’s OK. Because we are getting from the Russians what would otherwise have been sent [somewhere else],” said Georg Zachmann, senior fellow at Bruegel. “What Europe urgently needs is a mechanism to protect against the event that Russia selectively sends gas to individual buyers in Europe in order to buy political benefits” and disrupt Europe’s unity, he added.
European solidarity is already being tested with a rift developing between countries such as Spain and Greece in favour of a cap on gas prices, while Germany, Denmark and Netherlands have remained sceptical of such a move. Hungary, meanwhile, signed a new gas deal with Gazprom in August.
If the solidarity breaks, “then we might run the risk that more countries than just Hungary would be very willing to accept Russian gas easily and that would be a big issue”, Zachmann said.
Source: Financial Times