It seems that Europe is afraid to impose a complete ban on Russian liquefied natural gas supplies.
European Union countries are not sure they will be fully supplied with the required amount of LNG after new LNG export terminals start operating in the U.S. and a number of other countries. Even Germany is increasingly buying Russian LNG, albeit bypassing it via third countries.
The EU's 16th package of anti-Russian sanctions will not include a complete ban on purchases of Russian liquefied natural gas. Restrictions will be imposed only on LNG deliveries to terminals that are not connected to the EU's common gas distribution system, according to Politico, citing two European diplomats. The newspaper even emphasises that the new sanctions, which are planned to be adopted by the end of February 2025, will not affect most Russian imports.
There are also recent studies by a number of non-governmental organisations from Germany and Belgium, the essence of which is that Germany has purchased six times more Russian LNG through intermediaries in 2024 compared to the previous year.
Reuters wrote about European officials' concerns about replacing Russian LNG supplies: first replace them with something and then ban them, according to unnamed diplomats. And Financial Times sources said that the resumption of Russian gas supplies—pipeline gas, to be exact—could be one of the conditions of the peace treaty in Ukraine.
The EU seems to have an irresistible attraction to Russian gas, even despite its anti-Russian foreign policy and sanctions.
Even in the European media, reports that Europe will buy more and more Russian liquefied natural gas have long become commonplace. According to 2024 data, the picture is roughly as follows. The main consumers of liquefied gas from Russia last year were:
Obviously, these countries do not consume all of the purchased gas on their domestic markets. Some of it is transported through the gas transmission system deep into the continent for consumption by other countries, such as Germany.
According to reports by the German non-governmental organisations Deutsche Umwelthilfe and Urgewald, the Belgian Bond Beter Leefmilieu, and even the Ukrainian Razom We Stand, the Federal Republic of Germany will buy more Russian LNG in 2024 than it did a year earlier. According to Tagesspiegel, last year German SEFE (former Gazprom Germania) increased its imports of liquefied natural gas from Russia six times compared to 2023.
The organisations described above and the German media claim that Germany has de facto received about 5.6 billion cubic metres of gas via France, which was previously delivered to the EU coast in the form of LNG.
How so? After all, Germany has banned the import of Russian LNG through its ports. But no one has banned reception in the ports of Belgium and France, where LNG is regasified and then transported through pipes to Germany. Moreover, SEFE has a long-term contract with a take-or-pay clause, and at the beginning of the year the Russian government authorised the supply of gas to the German company under this contract until the end of its term—until 2040. SEFE inherited the contract from Gazprom, but under it Yamal gas is supplied not to Germany, but to India's GAIL (nominally, but in reality there are also swap schemes, they say). In 2022–2023, SEFE kept this gas for itself amid supply shortages, which even caused GAIL's intention to sue.
After 2022, EU states have consistently rejected gas supplies from Russia, reducing gas imports by 78 billion cubic metres in the first year alone. To cover the deficit, they attracted imports from other sources. The Europeans took broadly similar steps in the following years.
Francesco Sassi of the Institute of Industry and Energy Studies in Bologna, Italy, author of a research paper The (Un)Intended Consequences of Power: The Global Implications of EU LNG Strategy to Reach Independence from Russian Gas published in the journal Energy Policy, analysed the consequences of these policies.
According to the researcher, LNG imports to the EU in 2022 cost over €315 billion, more than the combined GDP of EU members such as Hungary and Slovakia. That figure was a multiple of 2019 or 2020 levels.
In other words, the cost to the EU of the gas conflict with Russia far exceeded the amount of aid it sent to Ukraine in the same timeframe, says Alexandr Berezin in the article devoted to the topic.
Sassi stated that the price of the process could be lower if the European Commission allowed long-term LNG supply contracts. However, the EC opposed such contracts for ideological reasons (the need to completely abandon gas in the foreseeable future). As a result, even in 2024, average electricity prices in the EU were twice as high as before 2022. This continued to undermine the competitiveness of European companies against the backdrop of China and the U.S., where prices are ultimately much lower.
As the author noted, a large and paradoxical consequence of the EU's LNG strategy has been the growing European dependence on Russian LNG.
The short answer is that it is unlikely. Firstly, until 2026–2028, when major new LNG production capacities in Qatar, the U.S., Canada, and Mexico come online, Russian LNG is an increasingly welcome guest in Europe. At the end of 2024, if Kpler data is to be believed, LNG exports from Russia rose by 4% compared to 2023, to a record 33.6 million tonnes. 52% of this volume went to the European market. In 2025, the growth rate is set to continue. In the first two weeks of this year, 27 EU countries purchased 837.3 thousand tonnes of LNG from Russia. For comparison, last year's figure for the same period was 760.1 thousand tonnes of LNG.
Secondly, it is far from certain that the desire to buy Russian LNG from EU consumers will weaken even with the emergence of free LNG volumes on the world market due to the launch of new terminals in Qatar and the U.S. after 2028.
As Boris Martsinkevich, a Russian expert, noted, Europe's 'love' for Russian LNG is evident at least because France's TotalEnergies is a direct shareholder in the Yamal LNG project. Every shipment of liquefied gas sold from this Russian project (including to the EU) is a profit not only for Russia's Novatek, but also for TotalEnergies.
Qatar cannot fully replace LNG from Russia simply because it has both major LNG projects operating on long-term contracts with prices linked to oil and delivery locations. They are serious there. There is no more than 15% capacity left for the spot market, and it is a big question what of this volume will go to Europe. Doha has repeatedly warned about this.
According to Boris Martsinkevich, the U.S. will indeed have a lot of additional LNG production capacity in a few years. If all the projects are implemented as planned, it will be about 200 million tonnes of LNG per year. But it is important to understand that these plants operate under a 'liquefy or pay' agreement, and the buyers are European TotalEnergies, BP, and Shell. The principle of selling liquefied gas on FOB terms, i.e., the company has bought LNG on the U.S. coast, but where it will send it—to the EU or Asia—it decides for itself.
With such a configuration, says Martsinkevich, there is no guarantee that after 2026–2028, when new LNG terminals are launched in the U.S., a large volume of gas will go from America to Europe. It will go wherever it is more profitable for oil and gas companies to sell it.
Moreover, there is no certainty that Europe will need as much gas in a couple of years as it does now. The rate of decline in demand is very serious in this market. Large industrial enterprises from Europe are actively moving to the U.S. and Asia.
While the EU consumed about 415 billion cubic metres of gas in 2019, the figures are less than 300 billion cubic metres by the end of 2024.
Most likely, this is why the 16th package of sanctions will not include a complete ban on LNG from Russia. There will be enough of this energy resource on the world market in a couple of years. Some analysts even predict a surplus and a drop in prices, but there is no guarantee that there will be such a surplus (in case not all LNG projects are launched in time). The surplus will be substantial and will last for a long time.
There is also no guarantee that European LNG buyers will take LNG to Europe from the new American projects, and not let shipments of methane go to other regions, where the price will be higher.
Source: Oil Capital, Naked Science
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