London
CNN business
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Europe may be closer than ever to moving away from its energy dependence on Moscow, but it can’t live without one of Russia’s natural gas.
Russia’s exports of coal, oil and natural gas to Europe via pipelines have fallen sharply, Since Moscow’s invasion of Ukraine In late February, Russian LNG imports increased.
Russian liquefied natural gas (LNG) imports to Europe and the UK March and October this year are compared to the same period in 2021, according to consultancy Rystad Energy.
European imports of Russian LNG began to accelerate last fall as countries faced gas shortages. Rystad’s data show that Russian imports doubled in his year to September to 1.2 million tons.
These shipments could be valued between $1 billion and $2 billion, analysts told CNN Business.
Europe races this year to restock stocks ahead of winter as Russia dramatically cut pipeline gas flows, including halting all shipments through the critical Nord Stream 1 pipeline in September. Did. Ironically, global supplies of LNG, including from Russia, are proving to be an important alternative.
Most of Russia’s LNG imports are Privately owned Novatek, state It is the second largest producer of natural gas after Gazprom. Novatek operates the Yamal LNG project in the Arctic Northwest.
Russia is the world’s fourth largest LNG producer, currently accounting for about 15% of Europe’s. Kaushal Ramesh, senior gas and LNG analyst at Rystad, believes total LNG supplies will remain unchanged next year.
“Europe wants to keep these volumes as long as possible,” he told CNN Business.
But like Russia’s pipeline gas, Europe’s appetite for LNG could remain vulnerable to a sudden supply cut by Moscow. The surge in imports also contradicts the bloc’s ultimate ambition to completely cut ties with Russia’s energy and cut off funding for the Kremlin’s war effort.
European sanctions do not yet cover any form of natural gas, as they are important to some countries’ energy security. This includes Germany, the block’s largest economy.
“The EU needs LNG,” Anne-Sophie Corbeau, a global research scholar at the Center for Global Energy Policy (CGEP), told CNN Business.
“So it’s convenient for them to turn a blind eye [Russian] LNG, Russia continues to enjoy [the] Revenue … so far this LNG has received little attention,” she added.
Most of the imports in September were destined for France, Spain and Belgium, but some cargo was later reloaded and shipped to non-European countries such as China, Ramesh said.
So far this year, global LNG imports to Europe have risen 47% to 86 million tonnes, with significant shipments coming from the US and Qatar, according to Rystad data.
Efforts to replenish inventories by EU countries have been very successful. Storage levels have reached 95% of capacity across the block, according to Gas Infrastructure Europe data. This is well above the 88% that Block has averaged over the last five years. By this point in the year.
Indeed, warehouses are full and dozens of LNG-laden ships have been waiting in European ports in recent weeks, unable to find space to unload their cargo.
But a bigger challenge could come in the spring, when Europe will try to replenish its stores by drastically reducing Russian pipeline gas supplies. According to research firm Wood Mackenzie, inflows to Europe are only 20% of pre-war levels.
The International Energy Agency (IEA) reported last week that if Russia halted all remaining pipeline flow and China’s LNG demand rebounded, the block could face a gas shortage of 30 billion cubic meters next summer. said to be sexual.
That’s almost half the gas needed to fill winter stockpiles to the same level as this year, the agency said.
“The recent mild weather and falling gas prices threaten to creep complacency into the conversation about European gas supplies, but we are not out of the woods yet,” said Fatih, IEA Executive Director. Birol said in a report. .
The region will need all the LNG it can get to cover any possible shortfall, including Russian cargo, says Felix Booth, LNG chief at data firm Vortexa.
“We expect Russian LNG to continue to play a key role in filling European vaults into winter 2023,” he told CNN Business.
If Russia decides to weaponize its LNG exports, it will put the continent in a vulnerable spot.
The Russian government will pressure Novatec to demand payment in rubles, or sell it to some countries at lower prices to gain political support, as state-owned company Gazprom did for pipeline gas. Corbeau said at CGEP that it could decide to
Some believe Europe can deal with that scenario by importing more from Qatar.
“You’ll see the market react to that dynamic, [the impact] Massimo Di Odoardo, Vice President of Gas and LNG Research at Wood Mackenzie, said:
It’s unclear how much Russia earns from LNG sales in Europe, but it’s almost certainly much less than it would normally earn from pipeline gas exports.
Europe’s rising LNG imports from Russia — which Wood Mackenzie forecasts to reach 15 billion cubic meters for the full year — won’t be able to make up for the expected 100. Russia’s pipeline gas imports during the same period fell by 1 billion cubic meters.
Also, unlike Gazprom’s pipeline exports, Novatec’s LNG sales do not include export taxes that go directly into the Russian state, Di Odoardo said.
The complex ownership structure of the Yamal LNG project will also make export sanctions difficult.
Novatek owns just over half of the project, while France’s TotalEnergies owns a 20% stake, with the remainder shared by two Chinese energy and investment companies.
“[Europe] I’d rather get anything [it] As for Russian pipeline gas and Russian LNG…it will take a long time [it] We will consider sanctioning gas or LNG from Russia,” said Mr Ramesh.
— James Frater and Alex Hardie contributed to the report.