Norway Plans to Develop a New $570-Million Oil and Gas Field
The European Union has replaced addiction to one form of Russian gas with another. Instead of receiving pipeline gas from Russia from the east, Europe is now using Russian LNG imported in its ports in the west.
The EU, which hasn't sanctioned or banned Russian natural gas, has seen its imports of Russia's LNG jump since the Russian invasion of Ukraine and the significant reduction of Russian pipeline flows in 2022.
While LNG volumes are not as much as the pre-war flows of Russian pipeline gas to Europe, the bloc is the largest buyer of Russia's LNG. The EU purchased nearly half of all Russian liquefied natural gas exports in February 2024, with China a distant second, buying 21% of total Russian LNG exports, showed the latest data on Russia's fossil fuel exports compiled by the Centre for Research on Energy and Clean Air (CREA).
More than a tenth of the previous Russian pipeline flows to the EU have been replaced by Russian LNG imported into ports in Western Europe, mostly in Spain, Belgium, and France, according to a Reuters analysis of data.
The shift in Russian gas flows shows that while pipeline supply has slowed to a trickle - and could fall further with the end of a gas transit deal via Ukraine at end-2024 - LNG from Russia is making up at least a portion of Moscow's lost pipeline exports. It also shows that right now, Europe cannot afford to ditch Russian gas, at least not until it can ensure its energy and gas supply security to avoid another energy crisis.
The fact that neither pipeline gas nor LNG imports from Russia are banned, two years after Russia invaded Ukraine, shows the EU's uneasiness to lose any gas supply as it is careful to avoid a spike in prices and a repeat of the 2022 energy crisis.
The EU has an indicative non-binding goal to ditch Russian gas by 2027.
EU officials have called for coordinated action toward reducing Russian LNG imports, and no individual country has moved to ban these.
LNG Import Boom
The EU's imports of LNG from Russia have jumped in the past two years since Russia cut off some EU countries from pipeline gas in the spring and summer of 2022, and the Nord Stream pipeline was blown up in September that year.
Last year, EU ports imported 15.6 million metric tons of Russian LNG, per estimates by data analytics firm Kpler cited by Reuters. That's slightly higher than in 2022 but a surge of 37.7% compared to the pre-war imports in 2021.
While the pipeline gas imports from Russia slumped to less than 9% of EU gas supply, from more than 35% previously, Europe's imports of Russian LNG have raised the share of Russian gas in EU supply up to some 15%, according to EU statistics and Reuters calculations.
Between 2021 and 2023, Russian LNG supply to Europe increased by 11%, with supply to Spain doubling and to Belgium more than tripling, per data compiled by the Institute for Energy Economics & Financial Analysis (IEEFA).
The European terminals that imported the largest volumes of Russian LNG between 2021 and 2023 were Zeebrugge in Belgium, Montoir-de-Bretagne in France, Bilbao in Spain, Gate in the Netherlands, Dunkerque in France, and Mugardos in Spain, IEEFA's analysis based on Kpler data shows.
Many of those imports, especially in Belgium, are re-exports to Spain and China, according to CREA's analysis of February 2024 data of Russian fossil fuel exports.
"While Belgium's total LNG imports in February rose by a mere 4%, their imports from Russia saw a much more significant 44% rise. At the same time, Belgium's re-exports of LNG rose by a massive 81% - a significant portion of which was shipped to Spain and China - pointing towards the country's role in transhipping Russian gas globally," CREA said.
IEEFA also noted at the end of last year that around 21% of Russia's LNG volumes bound for the European Union are transshipments, which are not included in official import figures and thus ignored by EU policymakers.
EU Uncertain How To Handle Russian LNG Imports
Belgium is looking into ways to tackle the transshipment issue without putting European supply security at risk, a spokesperson for the Belgian energy ministry told the Financial Times in November.
Spain, for its part, is seeking a tougher EU-wide coordination on handling imports of Russian LNG, Spanish Energy Minister Teresa Ribera told Bloomberg in an interview last month.
The EU will soon allow individual member states to block imports of LNG from Russia without the use of sanctions by limiting access of Russian gas to their gas systems.
But Spain wants the EU to make sure that an EU member state can block such imports without cargoes being diverted to neighboring EU countries, according to Ribera.
"If I ban it unilaterally and it comes to France?" Ribera told Reuters.
EU Energy Commissioner Kadri Simson is pushing for some action at EU-wide level.
Simson said last month, "I have repeated that we cannot afford Russia to compensate through LNG channels some of the volumes it has cut off by unilateral decisions via pipeline exports."
It's not certain how the EU can do this in the near term without roiling the gas markets just as prices have slumped to pre-war levels and the EU made it through the winter with a record volume of gas left in storage.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
Comments
The EU's appetite for Russian piped gas will return once the Ukraine conflict is eventually settled. It will plug a huge hole in the EU finances resulting from importing the far more expensive US LNG.
Of course the EU will adamantly deny that it will ever return to importing Russian piped gas but economic and financial realities will dictate its decision particularly German's.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert
The irony is stunning as the MSM never points out the systemic hypocrisy of very inefficient "green" energy sources (5 to 6 times higher per kWh than hydrocarbons) that require hydrocarbons to produce. The governments protesting the actions of Putin while buying his methane is Monty Python humor fodder.
The world will need hydrocarbons for decades to come, especially after the governments can no longer afford to subsidize the "green" fuels. As we increase the atmospheric CO2 so will Earth's biomass (upto 30% more biomass at 1600ppm) as noted by greenhouses that supplement with CO2 and fossilized plankton beds prior to our current 2.6 million year Quaternary Glaciation period.