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Sep 13, 2022
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Past Ukraine: EU put pressure on LNG from Russia

While pipeline deliveries of Russian gas to the EU have fallen to record lows, Yamal LNG exports are on the rise. In August, France imported a third of liquefied natural gas from Russia. Naftogaz Ukrainy demands from the European Union to set a price limit for Russian LNG.

Naftogaz Ukrainy welcomes Ukraine’s support at the Friday meeting of the Transport, Telecommunications and Energy Council of the Council of Europe in Brussels and the start of discussions on limiting Russian gas exports to Europe. We call for the inclusion of Russian LNG in a potential gas price cap mechanism as the share of pipeline gas from Russia is declining while LNG is growing,” the Ukrainian national company said on Twitter.

Last week, at a meeting of EU energy ministers, most countries did not support capping Russian gas prices, but proposed capping all imported fuel, as this would not solve the problem of high fuel prices.

Thus, the European Commission found itself in an uncomfortable position. On the eve of the head of the EC, Ursula von der Leyen, said that it was impossible to introduce a price ceiling for all gas. She cited LNG as an example. Its suppliers will deliver where it is more profitable, she argued.

At the same time, LNG has become the main source that compensates for the decline in pipeline supplies from Russia. In August, exports of liquefied natural gas to the EU increased by 2.2 times compared to last year – up to 10 billion cubic meters (excluding supplies through the UK). And the share of Russian LNG remained at the same level – about 19%.

According to the Marinetraffic navigation portal, over 1.8 billion cubic meters of gas in the form of LNG was delivered to the EU from the Yamal LNG and Cryogas Vysotsk projects in the last month of summer. And after the complete shutdown of Nord Stream due to oil leaks in the turbine, the export of liquefied gas from Russia is only slightly inferior to pipeline supplies – 60 million cubic meters per day and more than 80 million cubic meters.

Most of the Russian LNG arrived in France in August – 1.1 billion cubic meters. This is more than the entire import of liquefied natural gas into the country in the last month of last year. In this, it was a third of all LNG imports and a third of fuel injection into storage facilities. According to GIE, France’s UGS stocks rose to 84.5% by September 1.

Obviously, part of the Yamal LNG is supplied under a contract with TotalEnergies, which is a shareholder of the Yamal LNG project. And other French companies could buy on the spot market.

In August, Yamal LNG was delivered to Spain, the Netherlands and Belgium. In Zeebrugge, liquefied gas was also sent from the medium-tonnage project Cryogas Vysotsk. Judging by the data of navigation portals, the Belgian terminal was not used as a transshipment terminal for supplies to Asia, since navigation is open and tankers go directly from Yamal LNG along the Northern Sea Route.

In less than two weeks of September, the supply of Russian liquefied natural gas to the EU remains at the same level. Up to 700 million cubic meters were delivered to the ports of the EU countries and another tanker (up to 100 million cubic meters) will be unloaded at the European terminal on September 15.

One of the reasons for the growth in LNG supplies to the EU may be the redirection of Yamal cargo, which until August 25 received under the contract Gazprom Marketing and Trading Singapore (GMTS). The trader came under the control of the German government and ceased to fulfill the contract for the supply of LNG to India, the main one of which was Yamal gas. It turned out to be more profitable for GMTS to pay a fine of $ 100 to the Indian Gail for every thousand cubic meters and resell LNG on the spot market in Europe, where prices in August exceeded $ 3,000.

Due to sanctions and counter-sanctions, Gazprom has reduced supplies to the European Union. For example, he stopped the Yamal-Europe and Nord Stream gas pipelines. The fall in Ukrainian transit at the same time occurred at the initiative of the Ukrainian side. The “GTS operator of Ukraine” declared force majeure at one of the two border points for gas reception, “Sokhravka”, which is under the control of the Russian army, but Gazprom did not recognize it and refused to transfer transit volumes to another point – “Sudzha”. As a result, deliveries through Ukraine decreased by almost 33 million cubic meters per day and, according to the Ukrainian side, the Russian company reduced contract payments. Last week, Naftogaz Ukrainy announced that it had filed for arbitration against Gazprom.

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