European countries are hooked on Russian liquefied natural gas (LNG), which, after a sharp reduction in pipeline gas supplies, has become one of the alternatives. In October, LNG and pipeline gas supplies to Europe almost equaled, and in the near future, most likely, LNG supplies will exceed pipeline ones, since Europe will not abandon Russian LNG in the context of the energy crisis, Bloomberg reports.
Since the beginning of the year, LNG imports from Russia to the EU have increased by 40%. The agency notes that this is a “bitter pill for European countries”, which are trying in every possible way to reduce Moscow's income from the sale of energy resources. However, the shortage of fuel leaves Europe no choice – in 2022, spending on LNG from Russia increased fivefold in nine months and amounted to €12.5 billion ($13 billion). A significant share of supplies came from France and Belgium, which allowed Russia to take second place after the United States in terms of LNG supplies to Northwestern Europe.
“Russian LNG must continue to flow. This is necessary to balance the global LNG market, which has already shrunk. I think that most European countries are really happy to turn a blind eye to this ( LNG supplies from Russia – The Insider )," Ann-Sophie Corbeau, a researcher at the Center for Global Energy Policy at Columbia University, told the agency.
To impose an embargo on Russian gas or LNG by analogy with oil sanctions, as the agency notes, the EU will not be able to – there are too many contradictions within the union and the Europeans' dependence on gas is too high. At the same time, Russia's share in Europe's energy mix dropped from about 30% to 10% this year. But the ties between Russia and Europe in the gas sector, although reduced, have not been reset. European companies still have stakes in Russian projects, including those that now supply LNG to the EU. The most striking example is the French TotalEnergies, which owns a 20% stake in Yamal LNG, Russia's largest LNG producer. The project itself belongs to Novatek, where the French company has a 19% share.
Increasing the supply of LNG and the state company "Gazprom". According to Bloomberg, Greece recently received the first batch of Gazprom's LNG. Nevertheless, European countries are in no hurry to build up cooperation with Gazprom, as they are afraid of being forced to pay for fuel supplies in Russian rubles – a similar condition was introduced in the summer for pipeline gas.
It is not yet possible to assess the effect of growth in LNG supplies to Europe for Russia, since increased taxes on LNG exports will only come into effect from 2023, these revenues have already been included in the new budget. However, the agency notes that, despite the sharp reduction in gas exports, Moscow will be able to benefit from record prices for gas, including liquefied gas. Europe, on the other hand, will not be able to significantly reduce the volume of LNG supplies until 2025 – it was before this date that many long-term contracts were concluded that LNG suppliers are not ready to review ahead of time due to high fines.