Although Russian gas is embargoed in Europe, Russia still sells hundreds of millions of dollars worth of liquefied natural gas (LNG), mostly to the same countries that have imposed sanctions on Moscow. “It appears that the Kremlin has scored a geopolitical victory by keeping the revenues from global LNG sales intact,” said Anne-Sophie Corbeau, a researcher at Columbia University’s Center for Global Energy Policy in New York.

“Europe is thirsty for LNG after Russia cut off most of its pipeline gas sales to the continent, turning the energy into a weapon in its war against Ukraine and its Western allies. Dozens of gas carriers, such as Pskov, are now docking in Europe,” Bloomberg writes in its October 13 edition.

The Pskov vessel arrived directly from Russia and unloaded its LNG cargo at the Revithoussa Desfa LNG terminal in Greece in early October. This is the first shipment from the new Russian LNG terminal. Moscow uses this terminal to deliver some of the same gas it recently sold to Germany through the Nord Stream 1 gas pipeline. “Russian LNG trade is growing rapidly,” the quoted publication also wrote.

While Russia is best known for its huge exports of pipeline gas, it is also the world’s fourth-largest carrier of LNG after Qatar, Australia and the United States. Russia’s LNG sales aren’t as big as pipeline exports once were, but they remain an important source of money.

Record import of LNG

Western countries imposed sanctions against Russian oil, but continued to buy Russian gas. Thus, almost 80 percent of the LNG exported by the Kremlin this year went to countries in Europe and Asia that have imposed sanctions against Vladimir Putin’s Russia.

In addition to China, most purchases are made in Japan, France and Spain. On the current trajectory, Russian LNG supplies will hit an annual record in 2022, according to estimates based on tank tracking data compiled by Bloomberg. Deliveries averaged 2.78 million tonnes per month between January and September, compared with an average of 2.62 million for all of 2021 and an average of 2.56 million in 2019 before the pandemic.

Spain, the world’s sixth-largest buyer of LNG, imported more from Russia in 2022 than in any previous year. Belgium is also on track to achieve its own annual LNG trade records. And France bought about 6% more in January-September than in all of 2021.

In Japan, everything seems to be going smoothly. While American and European energy companies such as ExxonMobil Corp. and Shell Plc left Russia, the Japanese government advised its domestic energy champions to stay. At the G-7 summit, Japan also pushed for oil sales from a key Russian energy project to be exempted from oil price caps.

Hybrid war

LNG supplies clearly show how Russia is playing cat and mouse with its Western gas buyers, cutting off exports to some but keeping others open, setting record prices and using them as a political and economic trump card. This is part of the hybrid economic war.

The International Monetary Fund recently warned: “The winter of 2022 will be difficult for Europe, but the winter of 2023 is likely to be worse.”

If the war in Ukraine continues, it seems that the European continent will not be able to completely disconnect itself from Russian gas. From a purely economic point of view, continuing this trade could make sense. From a geopolitical point of view, this means remaining at the mercy of Putin.

Russian LNG, facts and figures

In an article published on September 27, Anne-Sophie Corbo, research fellow at the Center for Global Energy Policy (CGEP) and Diego Rivera Rivota, research fellow at CGEP, answered several questions about the importance of commercial LNG flows from Russia and recent developments. what affects them Here are some of the details they provided:

1) About European LNG imports

“In 2021, Europe imported about 140 billion cubic meters of gas from Russia. Since April 2022, flows of Russian gas to Europe have decreased sharply, and imports to some countries have decreased; as of mid-September, they are below 20% of average daily volumes in 2021. In contrast, Russian LNG exports increased by 12% in the first eight months of 2022.

Russian LNG exports to Europe seem to be overlooked; they not only did not stop coming, but actually increased by 15% (to 13 billion cubic meters) compared to the same period in 2021. In fact, with the exception of February and June, Russian LNG exports to Europe increased both month-over-month and year-over-year. After the Russian invasion of Ukraine, only Lithuania and Great Britain completely stopped importing LNG from Russia.

In contrast, France increased its LNG imports from Russia, importing 5 billion cubic meters in the first eight months, overtaking Japan in February and March to become the largest importer of Russian LNG in those two months. To a lesser extent, Spain, Belgium and the Netherlands have also increased their LNG imports from Russia, while Italy and Portugal have occasionally imported Russian LNG this year.”

2) About the Russian LNG industry and its traditional trade flows

“There are four liquefaction terminals in Russia: Sakhalin-2 LNG, Yamal LNG, Vysotsk LNG and Portova LNG.” Sakhalin-2 LNG, located in the Pacific Ocean, is Russia’s first LNG export terminal operated by state-owned Gazprom. Yamal LNG, Russia’s largest LNG plant, located in northwestern Siberia, is owned by Novatek, which is often described as an “independent” company (not related to Gazprom or vertically integrated oil companies), although some its shareholders are close to the Kremlin, which can strongly influence its activities.

Among the shareholders of the Yamal LNG terminal is the French company TotalEnergies. Novatek also owns the Vysotsk LNG company located on the Baltic Sea. Finally, Gazprom also owns Portova LNG, Russia’s newest terminal in the Baltic Sea, which just shipped its first cargo.

Sakhalin-2 LNG flows are directed mainly to Japan, South Korea and Taiwan, traditional importers to Northeast Asia. The bulk of Sakhalin-2 LNG was sold to these countries under 14 long-term contracts, nine of which were concluded with Japanese companies.

In the first eight months of 2022, despite the Russian invasion of Ukraine, exports from this LNG terminal increased by more than 60% of the total volume of exports to Japan, then by 16% to South Korea, 14% to China and 7% to Taiwan. .

3) About changes in the Russian LNG industry after the invasion of Ukraine and how they affect importers

“It seems that for the first time Russia is strengthening its control over the LNG industry. Until recently, Sakhalin-2 LNG was jointly owned by Gazprom (the majority owner), the Dutch energy company Shell, and the Japanese companies Mitsui and Mitsubishi. But on June 30, President Putin signed a decree on the transfer of Sakhalin-2 LNG rights to the new Russian company Sakhalin Energy.

Gazprom will retain a controlling stake in the previous company. Requests from Mitsubishi and Mitsui to transfer their stakes to the new operator were approved in August.

Instead, Shell refused to participate in the project’s new operator. However, it will be able to receive LNG cargoes from the facility. Russia’s energy minister recently said he “expects Novatek to participate in Sakhalin-2,” and the company has confirmed its interest in evaluating its participation in the project.

All existing LNG contracts are to be transferred to the new Sakhalin-2 LNG operator. At the beginning of September 2022, Gazprom did not ask its LNG importers to transfer payments to rubles under the threat of reduced exports (as was the case with some European pipeline importers). However, it has hinted at the possibility in the past, a scenario that could be particularly difficult for Japan given its reliance on Russian LNG.”

(Photo article: DreamsTime.com)