As the European Union (EU) endeavors to reduce its dependence on Russian fossil fuels by 2027, an intriguing paradox emerges—a surge in the anticipated importation of liquefied natural gas (LNG) from Russia during the current year. This development transpires even as the EU, in recent times, assumed the role of an admonishing custodian, reprimanding India for its oil transactions with Russia and advocating restrictions on Indian commodities sourced from Russian oil.
Global Witness, a non-governmental entity engaged in analysis, scrutinized industry data, revealing Belgium and Spain’s unexpected prominence as Russia’s second and third-largest consumers of LNG, following China, during the initial seven months of this year.
In the chronological span from January to July 2023, EU’s import of cryogenic LNG escalated by an impressive 40%, in stark comparison to the corresponding period in the previous year.
It is noteworthy that this amplification occurs against a backdrop of limited prior LNG imports by the EU—a consequence of its reliance on pipeline-derived gas from Russia—prior to the Ukraine conflict.
Paradoxically, the EU’s augmentation of Russian LNG procurement contradicts its proactive efforts towards energy diversification.
Global Witness’ meticulous assessment discerns a distinct discrepancy in the European Union’s expansion of Russian LNG imports. While global growth registered a modest uptick of 6%, the EU experienced a more pronounced surge.
Predicated on insights provided by industry analytics firm Kpler, the analysis conducted by Global Witness elucidates a current increment in Russian LNG importation by the EU, estimated at approximately 1.7% above the preceding record peak in the previous year.
Remarkably, the financial outlay accompanying the LNG importation by the EU from January to July, based on spot market rates, approximates 5.29 billion euros, according to the observations of Global Witness.
Jonathan Noronha-Gant, a senior campaigner in the realm of fossil fuels at Global Witness, expresses disquiet regarding the EU’s strategic shift from piped Russian fossil gas to LNG. He highlights the consequential financial sustenance of Vladimir Putin’s endeavors through these transactions, regardless of whether the medium of transport is a pipeline or a maritime vessel.
An overwhelming proportion of the Russian LNG influx originates from the Yamal LNG joint venture, predominantly under the ownership of Novatek, a Russian entity. France’s TotalEnergies, China’s CNPC, and a Chinese state fund also possess stakes in the venture, although it remains subject to income tax despite export duty exemptions.
Beyond the substantial revenue influx to Russia, the implications extend to the EU’s vulnerability in the event of a unilateral decision by the Kremlin to curtail supplies—a scenario reminiscent of the piped gas reduction experienced last year.
Alex Froley, a distinguished senior analyst specializing in LNG at consultancy firm ICIS, discerns a prevailing commitment among long-term buyers in Europe to honor contracted volumes, unless political intervention mandates a ban.
Experts point out that Spain’s utility company Naturgy and France’s Total remain engaged in substantial contracts for considerable quantities of Russian LNG.
This narrative underscores the EU’s complex stance, wherein it reproaches India for its oil connections with Russia, while simultaneously fostering its own substantial dealings in Russian fossil fuels. Such intricacies accentuate the intricate web of global energy dynamics and diplomatic posturing.
