EU imports document volumes of liquefied pure gasoline from Russia

The EU is about to import document volumes of liquefied pure gasoline from Russia this yr, regardless of aiming for the bloc to wean itself off Russian fossil fuels by 2027.

Within the first seven months of this yr, Belgium and Spain had been the second and third-biggest consumers of Russian LNG behind China, in line with evaluation of trade knowledge by International Witness, a nongovernment organisation.

Total, EU imports of the super-chilled gasoline had been up 40 per cent between January and July this yr in contrast with the identical interval in 2021, earlier than Russia’s full-scale invasion of Ukraine.

The leap comes from a low base because the EU didn’t import important quantities of LNG earlier than the warfare in Ukraine resulting from its reliance on piped gasoline from Russia.

However the rise is far sharper than the worldwide common improve in imports of Russian LNG, which was 6 per cent over the identical interval, International Witness mentioned.

The NGO’s evaluation relies on knowledge from trade analytics firm Kpler, which confirmed that the EU is importing about 1.7 per cent extra Russian LNG than it did when imports hit a document excessive final yr.

International Witness mentioned the price of the LNG imported from January to July at spot market costs amounted to €5.29bn.

“It’s stunning that nations within the EU have labored so exhausting to wean themselves off piped Russian fossil gasoline solely to switch it with the shipped equal,” mentioned Jonathan Noronha-Gant, senior fossil gas campaigner at International Witness. “It doesn’t matter if it comes from a pipeline or a ship — it nonetheless means European corporations are sending billions to [Vladimir] Putin’s warfare chest.”

Many of the Russian volumes come from the Yamal LNG three way partnership, which is majority-owned by the Russian firm Novatek. Different stakes are held by France’s TotalEnergies, China’s CNPC and a Chinese language state fund. The enterprise is exempt from export duties however is topic to earnings tax.

In addition to leading to billions of euros in revenues going to Russia at a time when the EU continues to tighten its sanctions regime towards Moscow, the import ranges depart the EU uncovered to any sudden choice by the Kremlin to chop provides because it did for piped gasoline final yr.

Alex Froley, senior LNG analyst at consultancy ICIS, mentioned that “long-term consumers in Europe say they’ll preserve taking contracted volumes except it’s banned by politicians”. He added that an EU ban on imports would trigger some disruptions to delivery as international commerce patterns would must be rearranged, “however in the end Europe may discover different suppliers and Russia different consumers”.

Belgium imports massive volumes of Russian LNG as a result of its port of Zeebrugge is among the few European factors of transshipment for LNG from ice-class tankers used within the excessive north to common cargo vessels.

Spain’s utility Naturgy and France’s Whole even have persevering with contracts for giant portions of Russian LNG, analysts mentioned.

EU policymakers have been urging European corporations to not purchase Russian LNG.

Spanish power minister Teresa Ribera, whose authorities is chairing the six-month rotating presidency of the EU, mentioned in March that LNG ought to be hit with sanctions, including that the scenario was “absurd”.

Kadri Simson, the EU’s power commissioner, has mentioned that the bloc “can and will eliminate Russian gasoline fully as quickly as doable, nonetheless protecting in thoughts our safety of provide”.

EU officers have pointed to an total effort to section out Russian fossil fuels by 2027, however warned that an outright ban on LNG imports risked prompting an power disaster akin to final yr when EU gasoline costs hit document highs of greater than €300 per megawatt hour.

One official mentioned that regardless of European gasoline storage containers being greater than 90 per cent full forward of winter, there was nonetheless “numerous nervousness” ought to there be any additional cuts to provides.

Russian LNG accounted for 21.6mn, or 16 per cent, of the EU’s complete 133.5mn cubic metres of LNG imports (equal to 82bn cubic metres of pure gasoline) between January and July, Kpler knowledge reveals, making it the bloc’s second-biggest provider of the liquid gas after the US.

In March, power ministers launched a clause to new guidelines governing the bloc’s gasoline market that may permit governments to ban Russian and Belarusian corporations reserving capability on EU LNG infrastructure in an effort to discover a authorized method to stop imports.

However the proposal should first be negotiated with the European parliament earlier than it will possibly take impact.

Henning Gloystein, director of power, local weather and assets at Eurasia Group, mentioned the probability of governments having to order trade shutdowns due to gasoline shortages this winter was “close to zero”.

The EU should reduce demand by an extra 10 per cent, Gloystein added. “If we don’t structurally cut back gasoline consumption by 10 to fifteen per cent, we’re susceptible to repeating this race [for supplies] yearly.”

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