EU cannot quickly abandon Russian liquefied natural gas, its supplies have become a record - BBC

EU cannot quickly abandon Russian liquefied natural gas, its supplies have become a record - BBC

The EU has refused Russian pipeline gas, but replaced it with Russian LNG

EU cannot quickly abandon Russian liquefied natural gas, its supplies have become a record - BBC

The European Union is importing record volumes of liquefied natural gas (LNG) from Russia. This contradicts its plans to gradually phase out Russian fossil fuels.

Source. The BBC writes about why the EU cannot cut Russian LNG supplies amid the energy crisis.

Since the invasion, imports of Russian LNG to Europe have increased by 40%, according to the human rights organization Global Witness. From January to July 2023, European countries purchased 22 million cubic meters of LNG from Russia, while the volume of imports in the same period of pre-war 2021 was 15 million cubic meters.

The largest buyers of Russian LNG in the world after China are Spain and Belgium. These European coastal countries accept LNG carriers. In the first seven months of 2023, Spain accounted for 18% of total Russian sales, and Belgium for 17%.

Other major importers include France and the Netherlands, whose infrastructure transports Russian gas to other European countries.

The European Commission is currently implementing the REPowerEU plan, adopted in May 2022 in response to Russia's invasion of Ukraine. Its main goal is to rid the European Union of dependence on Russian fossil fuels – oil, gas, and coal.

It was expected that by 2027, REPowerEU measures would help Europe to completely abandon Russian supplies. However, in practice, it turned out that this could not be done so quickly.

European sanctions have sharply reduced imports of Russian oil and banned imports of all types of coal, but did not affect LNG. Currently, the EU has a ban on imports of Russian crude oil supplied by sea, as well as an embargo on oil products.

But gas supplies are not subject to sanctions.

In early September, Spanish Energy Minister Teresa Ribera told Reuters that the EU currently has no short-term plan to abandon Russian LNG.

In fact, the EU is trying to reduce its dependence on Russian pipeline gas by increasing supplies of Russian LNG.

According to the IEA, in an effort to replace the loss of pipeline gas, Europe is trying to get all the LNG available to it.

"The liquefied natural gas market is organized in a similar way to the oil market," explains the expert. "Traders are interested in the nearest one, the one that is the shortest to reach. Their task is to buy the cheapest gas with the cheapest delivery. And if it is not forbidden to buy Russian LNG, they will do so."

Why can't the EU stop importing Russian LNG now? For many years, Russia has remained one of Europe's key gas suppliers. A sharp refusal to import Russian LNG after the reduction of pipeline supplies will inevitably lead the EU to another energy shock.

To avoid a gas shortage, the EU is following the REPowerEU plan – its steps are aimed at reducing the bloc's energy dependence on Russia.

This goal can be achieved by increasing LNG imports from other countries and developing alternative energy. But the problem is that it is quite difficult to invest in both of these areas at the same time, the expert notes.

"You either need to invest in alternative sources that can reduce gas consumption, or build new terminals, enter into new long-term contracts and try to get LNG – you need demand for this. Either invest in one or the other. It is very difficult to do both at the same time," the expert believes.

In addition, it is more profitable for Europe to buy LNG from Russia because of logistics. It is simply cheaper to import LNG from Russia than from the United States, so Europe has increased its imports.

At the same time, US LNG exports to the EU are also growing. By the end of 2022, its volume increased almost 2.5 times – to 117.4 million cubic meters from 47.8 million cubic meters in 2021.

Background. Meanwhile, Bloomberg announces that the 12th EU sanctions package includes a ban on imports of Russian diamonds, LNG, and restrictions on the IT sector.

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