Page 10 - EurOil Week 46 2022

EurOil PIPELINES & TRANSPORT EurOil

Europe still can’t shake off

Russian LNG habit

EUROPE RUSSIAN exports of LNG to the Europe rose a So far in 2022, France, the Netherlands, Spain
staggering 50% in the first nine months of 2022, and Belgium have been the main importers of
Even as European according to EU figures, even as volumes of Russian LNG, said energy market monitoring
purchases of pipeline pipeline gas fell by 80%, as Europe’s need for gas group Montel, with a third of Russian LNG arriv-
gas from Russia fall, trumped the EU’s efforts to cut dependence on ing in France and nearly a quarter in Spain.
LNG supplies remain Russian gas. France’s TotalEnergies is a minority share-
strong. Alongside the EU’s purchases of LNG from holder in Yamal LNG, while many countries are
the US and Qatar, Novatek’s Yamal LNG project locked into long-term deals to import LNG form
on the Arctic Sea coast is also sending tankers the terminal.
to Europe. Another option is for Europe to buy up spot
From January to September 2022, the EU cargoes on the world market, outbidding Asian
imported 16.5bn cubic metres of Russian LNG, buyers for cargoes from Sakhalin. These can then
up from 11.3 bcm in the same period last year, be swapped for cargoes already in Europe, with-
Politico reported. out having to wait for physical ships to make the
This compares with pipeline imports halving voyage from Asia to Europe.
from 105.7 bcm in the first nine months of 2021 Meanwhile, the UK has officially banned
to 54.2 bcm in the same period of 2022. LNG imports from Russia from January, even
What this means is that Europe’s efforts to though the move is purely symbolic, as the UK
present a united front to Russia on gas imports had already stopped buying Russian chilled
is failing, and blows wide open Brussels’ ambi- gas.
tions of becoming independent of Russian gas It also signals that Europe’s current dash for
imports. LNG will not insure the continent against its
Meanwhile, the EU’s proposed price cap on continued need for gas coming from Russia.
gas could lead to volatility in the market, and one Russia is taking advantage of high gas prices,
EU official said that the cap could be abolished and is increasing its total LNG exports to Asia
immediately if not enough gas arrives in Europe and Europe, which now account of 80% of its
and the economy suffers. exports.
There are fears that if Europe is not able to pay Before the current 50% increase in exports,
premium prices for LNG, even from Russia, then Russia exported 2.78mn tonnes of LNG per
cargoes will switch to Asia, leading to potential month in 2022, up from 2.62mn tonnes in 2021
fuel shortages in Europe. and 2.56mn tonnes in 2019.
The EU said on November 17 that it proposed The demand for LNG in the EU will likely
to apply a cap to the TTF hub, Europe’s leading increase further in 2023. While in early 2022 the
gas benchmark. EU bought up Russian pipeline gas fill storage
The EU said it wanted to send a message to facilities, that option is no longer available.
the market that Europe was not willing to pay Indeed, buying LNG could expose the EU to
high prices during periods of volatility. further pressure from the Russian government
Since Russia invaded Ukraine, the TTF has in 2023 as Europe again needs to fill its storage
seen abrupt movements, fuelled by speculation tanks for winter 2023-2024.
over the Kremlin’s next move. This has led to EU sanctions on Russian LNG date back to
record-breaking prices, particularly in summer, April, when it banned exports of LNG produc-
when the benchmark reached a record high of tion equipment to Russia as part of the EU’s fifth
€349 per MWh. sanction package. ™

P10 www. NEWSBASE .com Week 46 21•November•2022