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The United Kingdom has officially announced that it has stopped importing Russian liquefied natural gas (LNG), with the British Foreign Office calling the move a direct result of gas revenues financing Russia’s ongoing war on Ukraine.
“Today the UK has ended all imports of Russian Liquefied Natural Gas. We’re cutting Putin off from funding his illegal war and supporting countries around the world to reduce their own dependency,” the Foreign Office said in a tweet.
The U.S. has become the leading supplier of LNG to the UK and other European nations.
Europe has been working hard to wean itself off Russian energy commodities ever since the latter invaded Ukraine. The European Union has banned Russian coal and plans to block most Russian oil imports by the end of 2022 in a bid to deprive Moscow of an important source of revenue to wage its war in Ukraine.
But ditching Russian gas has proven to be more onerous than Europe would have hoped for. Whereas supplies of Russian pipeline gas--the bulk of Europe’s gas imports before the Ukraine war--are down to a trickle, Europe has been hungrily scooping up Russian LNG. The Wall Street Journal has reported that the bloc’s imports of Russian liquefied natural gas jumped by 41% Y/Y in the year through August.
“Russian LNG has been the dark horse of the sanctions regime,” Maria Shagina, research fellow at the London-based International Institute for Strategic Studies, has told WSJ. Importers of Russian LNG to Europe have argued that the shipments are not covered by current EU sanctions and that buying LNG from Russia and other suppliers has helped keep European energy prices in check.
Natural gas prices in Europe have plunged over the past few months with CNBC reporting that a “Wave of LNG tankers is overwhelming Europe in an energy crisis and hitting natural gas prices.” According to MarineTraffic via CNBC, 60 LNG tankers, or ~10% of the LNG vessels in the world, are currently sailing or anchored around Northwest Europe, the Mediterranean, and the Iberian Peninsula. Such vessels are considered floating LNG storage since they cannot unload, something that is impacting the price of natural gas and freight rates.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.