The European Union’s Commission has warned over reputational risk stemming from continued imports of Russian LNG whilst sanctions on oil and coal imports are meant to restrain Russian fuel revenues. Our data show that Russian LNG exports to European buyers remain strong and have seen a significant increase year-on-year in this year’s first quarter.
The Dutch government is seeking to end LNG imports from Russia, according to Energy Minister Rob Jetten speaking to Bloomberg last week.
According to the Minister, the Netherlands has not signed new LNG supply contracts and is allowing existing ones to lapse.
Previously, EU Energy Commissioner Kadri Simson had called upon EU Member States and companies to stop buying LNG from Russia, highlighting a growing reputational risk to the EU’s policy of curbing Russia’s fuel sales even if the total imported amount is only a fraction of previous pipeline imports.
The European Union was quick to place sanctions on seaborne oil and coal imports from Russia but refrained from legally restricting gas imports, both by pipeline and as LNG.
According to our data, European LNG imports from Russia remained broadly steady year-on-year in March.
Shipped volumes amounted to 1.61mmt in March 2023 compared to 1.71mmt in March 2022. This also represented an increase of 0.09mmt (6pct) over March 2020.
For the first quarter this year, however, European LNG imports from Russia had grown by 0.50mmt (11pct) from 4.55mmt in 1Q 2022 to 5.05mmt in 1Q 2023, according to our data.
When looking at 1Q 2021, the 2023 difference is even higher at 1.04mmt (26pct).
On an annual basis, the growth in Russian LNG exports to European buyers – mainly located in the European Union – is also pronounced.
Total European LNG imports from Russia amounted to 13.79mmt in 2021 compared to 16.97mmt in 2022, a difference of 3.18mmt (23pct).
Notably, a complete ban on European imports of Russian LNG may still not lead to a drastic fall in Russian LNG revenue.
Cargoes could (and have been) shipped via Suez and the Northern Sea Route to Asia.
Whilst the Suez route would add considerably to journey time and transit cost, we have noted an uptick in such Russian shipments.
With summer also approaching the Northern Hemisphere, we are also expecting exports from Yamal LNG via the Northern Sea Route to the Far East to increase quickly, too.