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New west-east route keeps Europe hooked on Russian gas

Western European federal governments have sought to decrease their energy dependence on Russia considering that the break out of the Ukraine war, however when it comes to gas, they have significantly substituted the country's pipeline products with its melted gas (LNG).

A analysis of information found more than a tenth of the Russian gas previously shipped by pipeline to the European Union has actually been replaced by LNG provided into EU ports.

The rise is partially the result of discount rates, industry and trading sources say.

Personal Russian manufacturer Novatek in 2015 sold low-cost cargoes into the EU turned down by purchasers in other parts of the world, while state-owned Gazprom increased exports from its new Portovaya LNG task, offseting its falling pipeline deliveries westward.

Home to the EU's largest fleet of import terminals, Spain, which did not formerly import piped Russian gas, has become the leading re-exporter of seaborne Russian supply.

EU stats and estimations reveal the rise in LNG has pressed the share of Russian gas in EU supply back up to around 15% after pipeline imports from Gazprom had plunged since the war to 8.7% from 37% of EU gas supply.

Russia sent more than 15.6 million metric heaps (mt) of Russian LNG to EU ports last year, according to information analytics company Kpler, a small increase from 2022 and a 37.7% jump compared to 2021.

The increase does not breach EU law.

Western European federal governments enforced sanctions on oil following the break out of the Ukraine war in February 2022, but they have actually not done the exact same for gas.

Instead the European Commission has called for a voluntary phaseout of all Russian fuel imports by 2027.

The switch from pipeline to LNG imports has, nevertheless, a. significant environmental expense, as energy is needed to gasify,. ship and re-liquefy the fuel - a pattern at chances with the EU goal. of reaching net absolutely no greenhouse gas emissions by 2050.

ULTIMATE ORIGIN ENDS UP BEING UNNOTICEABLE

Delivery records just reveal freights' previous locations,. rather than the supreme origin.

That indicates LNG landing in Belgium, France Spain and the. Netherlands sheds its Russian label - which can prevent purchasers -. before being piped inland or reloaded onto other ships.

In late 2023, independent traders sold Russian volumes on. the Spanish market at a discount of 1 euro ($ 1.07) per. megawatt-hour (MWh) less expensive than the European benchmark cost. TTF, industry and trading sources told .

That relates to savings of approximately 920,000 euros on a. common cargo worth 41 million euros at area rates, . estimations revealed.

This year, a discount of between 30-50 eurocents has. used, the sources said.

Sales data is private, but ship-tracking satellites showed. 4 Swiss trading companies bought and sold 1.3 mt of Russian LNG. in Spain last year: Gunvor, MET, ENET and DXT.

That included a freight initially destined for Argentina,. before issues over sanctions on monetary deals with. Russia stopped the sale.

Gunvor diverted the turned down tanker to Spain.

Gunvor and MET decreased comment on their Russian trading. ENET and DXT did not react to requests for comment.

Big Spanish energy companies, including Repsol, Cepsa,. Endesa and Iberdrola said they do not buy Russian gas straight.

However, Endesa CEO José Bogas did not rule out that it. discovered its method into volumes purchased from 3rd parties.

Spain's Naturgy, France's TotalEnergies and Britain's Shell,. have stopped additional area purchases, however state they are obliged. to pay for the minimum quantity of gas on their long-term. contracts whether they take it or not.

The Russian imports have improved Spain's and the EU's. energy profile.

In 2023 the 5.08 mt imported from Russia a little surpassed. the total volume of gas Spain exported to 21 nations around. the world, consisting of some members of the EU.

TURNAROUND OF FLOWS

Until February 2022, the bulk of the gas Russia provided to. Europe showed up through the Nord Stream pipeline to Germany. Now,. it lands on Europe's western periphery and makes its way inland,. reversing the previous east-to-west flow.

France's 3.6 mt of Russian LNG imports last year represented. 41% of its net exports.

When including the volumes sent eastward by Portugal and. Spain, all the gas France piped to Belgium and Germany and. almost half what was sent to Switzerland and Italy might be. attributed to Russian LNG, information from grid operators reveal.

Belgium imported some 4.8 mt of Russian LNG - practically double. the volume it piped to the Netherlands.

About 0.7 mt was available in through Dutch terminals.

Those estimations exclude transhipments, when LNG changes. ships in an EU port before sailing on.

Germany - which no longer directly imports Russian gas - is. the ultimate location.

In 2015, Germany imported 48.6% of its gas through pipeline. from Belgium, France and the Netherlands, according to the. federal network regulator Bundesnetzagentur.

As much as 13.7% of gas in the German grid could be Russian,. in a circumstance where those nations passed on as much Novatek. LNG as possible.

The reality is probably less when representing nationwide. intake and supply blends.

Physically, it is imaginable that Russian gas molecules. could come to Germany, a Bundesnetzagentur spokesperson said.

We do not know whether German importers buy Russian LNG. amounts directly. It would not be forbidden, the. representative added.

STRUGGLE TO REDUCE DEPENDENCE

As the share of Russian LNG grows, the impact especially. sticks out in Greece.

It cut gas consumption and minimized its pipeline Russian. imports by 20%.

But because Gazprom LNG shipments more than quadrupled, the. share of Russian gas in Greece's supply reached 47% in 2015,. up from 36% in 2022, according to grid operator DEFSA.

Greece's state-controlled DEPA has considering that filed for. arbitration versus Gazprom, partially based upon data revealing those. LNG sales to Greek rivals were at a high discount to. DEPA's pipeline gas contract cost.

Beginning in April, EU nations can legally ban Russian. firms from booking their facilities capability to deliver LNG.

Significant importers Spain and Belgium, however, stated they. probably will refrain from doing so.

If I prohibit it unilaterally and it comes to France? Spanish. Energy Minister Teresa Ribera said. We need a typical position.

(source: Reuters)