Europe's imports of Russian gas transported by sea reach a record high

The increase in LNG shipments coincides with a dramatic decline in the fuel's pipeline flows

Europe is receiving a record amount of Russian gas transported by sea, demonstrating the region's continued dependency on Russia for the vital fuel despite the fact that pipeline flows have all but ceased.

Imports of Russian liquefied natural gas, which is typically transported on large tankers, increased by more than 40 percent between January and October of this year compared to the same period in 2021, highlighting the difficulty for Europe to wean itself off gas from Moscow despite Brussels' efforts to diversify its energy sources.

During the period, 16% of European seaborne imports consisted of Russian LNG. Even though the total volume of 17,8 billion cubic metres was a fraction of the 62.1 billion cubic metres of pipeline gas flows during this time, Europe remains vulnerable to Vladimir Putin's energy weaponisation.

“One day, Putin could wake up and say, ‘we’ll stop sending LNG to Europe’, forcing the region to buy from an even more expensive spot market,” said Anne-Sophie Corbeau, global research scholar at the Center on Global Energy Policy at Columbia University.

Russia could also divert the cargoes to LNG-starved countries such as Bangladesh and Pakistan at cheap prices to “achieve political gains” and “put pressure on Europeans”, she added. “It’s very important not to forget that a lot of countries are suffering, because they cannot afford LNG.”

Due to the importance of Russian gas to the energy security of some European states, there are no sanctions on Russian gas. After the invasion of Ukraine, the Kremlin took advantage by gradually limiting the flow via pipelines, driving up prices and fueling a cost of living crisis across the continent.

Since May, gas shipments through the Yamal pipeline, which passes through Poland, have been stopped, and in the summer, Russia stopped gas flows through the Nord Stream 1 line to Germany. Some European nations asserted that the pipeline break was an intentional act of sabotage.

Russia has also recently threatened to restrict supply to western Europe via the sole remaining pipeline connecting the region to Ukraine. According to figures compiled by the think tank Bruegel, Russian pipeline gas exports are down over 80 percent compared to the same period last year.

Europe, which received 155 bcm of Russian natural gas, including LNG, last year, has resorted to the worldwide LNG market to cover the void. It imported a record 111 bcm of LNG internationally between January and October, a nearly 70% rise year-over-year, according to data from Refinitiv.

Russia's imports over the period totaled 17.8 billion cubic metres, a 42 percent increase compared to the same period in 2021, with France, Belgium, Spain, and the Netherlands absorbing nearly all of the volume.

The majority of Russian LNG is produced by the Yamal LNG joint venture, which is controlled by the Russian corporation Novatek, France's Total, China's CNPC, and a Chinese governmental fund. Gazprom, a Russian state-owned company, owns little less than 10 percent of Novatek's stock.

According to satellite data analytics company QuantCube, a huge ship carrying LNG from the Portovaya facility near Russia's southern border with Finland arrived in Greece last month. This is just another indication of Europe's ties with Russia. This would be the initial shipment from the Portovaya project, which began operations this year.

Since 2017, the country has become one of Europe's top three suppliers, accounting for almost 20% of its total imports during the preceding three years. According to Refinitiv, Russia has been the second-largest source this year, but its share has decreased to 16% despite record imports as Europe has imported more US LNG, which accounted for 42%. Qatar was Europe's third-largest LNG supplier, accounting for 13.7% of the total.

“My somewhat cynical take is if we buy LNG from Russia, that’s OK. Because we are getting from the Russians what would otherwise have been sent [somewhere else],” said Georg Zachmann, senior fellow at Bruegel. “What Europe urgently needs is a mechanism to protect against the event that Russia selectively sends gas to individual buyers in Europe in order to buy political benefits” and disrupt Europe’s unity, he added.

Already, European cooperation is being put to the test, as a rift is growing between nations such as Spain and Greece, who want a cap on gas prices, and Germany, Denmark, and the Netherlands, who remain sceptical of such a move. In August, Hungary inked a new gas contract with Gazprom.

If the solidarity breaks, “then we might run the risk that more countries than just Hungary would be very willing to accept Russian gas easily and that would be a big issue”, Zachmann said.

By fLEXI tEAM