Page 109 - RusRPTDec22

While European imports of Russian pipeline gas declined by more than 80%, shipments of Russian LNG to Europe ballooned by 50% during the first nine months of 2022.
The imports of Russian LNG are part of a sustained push by the EU to replace Russian pipeline gas with gas in the form of LNG. Russian LNG sales are growing, including to Spain and Belgium and other countries that have been fully engaged in NATO and EU efforts to sanction Russia. Countries that previously did not import any Russian natural gas via pipeline are now buying Russian LNG.
Almost 80% of Russian LNG exports have gone to Europe and Asia. The country shipped an average of 2.78m tonnes of LNG per month in 2022, up from 2.62mn in 2021 and 2.56mn in 2019. In September 2022 alone EU countries purchased almost $1bn worth of LNG from Russia.
The demand for LNG in the EU will likely increase further in 2023. In 2022 the bloc was able to use Russian pipeline gas in the earlier part of the summer to begin filling its gas storage tanks before pipeline flows began to dwindle. Next year, no such buffer will exist.
The mad dash for LNG shipments has resulted in extensive traffic jams across Europe’s regasification terminals where LNG carriers can offload their cargo. Imports of LNG have risen most in Spain, France and Portugal. However, many EU countries do not operate regasification plants. Spain operates six LNG terminals. And even with that capacity, more than a dozen vessels were cued off the country’s coast in November waiting to offload their cargo.
The absence of a pipeline system connecting Spain to other European countries also means that countries like Germany can not easily receive gas that arrives in Spain in the form of LNG. Plans to build additional pipeline infrastructure connecting Portugal and Spain to France and Germany are in the works, but will take several years to materialise. The global LNG market is likely to tighten significantly in the months to come.
An economic slowdown in China freed up considerable quantities of LNG for reexport to Europe, but Beijing announced in November that it would halt the sale of LNG to foreign buyers in an effort to reduce the flow of LNG out of the country. If China’s economy picks up in 2023 then analysts say that will only tighten the LNG market further and keep prices high.
Gas prices this autumn (white) were falling fast as tanks filled and the weather was warm. But the market is expecting the gas crisis to continue as the three year forward prices (orange) remain at historical highs.
109 RUSSIA Country Report December 2022 www.intellinews.com