Why is the EU nonetheless shopping for Russian fuel? – DW – 04/29/2024 | EUROtoday

More than two years since Russia started its full-scale invasion of Ukraine, its fuel remains to be flowing into Europe.

While the EU has vastly lowered the quantity of fuel it imports from Russia, the hydrocarbon remains to be powering some European properties and companies, and boosting Kremlin revenues consequently.

When the conflict started, European leaders had been compelled to reckon with a long-established dependence on each Russian fuel and oil. Gas was a selected drawback as in 2021, 34% of the EU’s fuel got here from Russia.

Countries in Central and Eastern Europe had been particularly dependent. When the EU mooted a ban, German Chancellor Olaf Scholz was fast to voice his opposition. “Europe has deliberately exempted energy supplies from Russia from sanctions. At the moment, Europe’s supply of energy for heat generation, mobility, power supply and industry cannot be secured in any other way,” he stated.

Vladimir Putin seized on this.  Throughout 2022, Russia itself minimize fuel imports to Europe. European leaders fretted a few winter power scarcity. These fears had been by no means realized however crucially, they meant the EU by no means really sanctioned Russian fuel.

“It was never a sanction,” says Benjamin Hilgenstock from the Kyiv School of Economics. “It was a voluntary decision by countries, and a smart one, to diversify supply and no longer be blackmailable by Russia,” he instructed DW.

Exit the pipe, enter the LNG

According to EU information, the share of Russian pipeline fuel member states imported fell from 40% of the whole in 2021 to about 8% in 2023. However, when Liquefied Natural Gas (LNG) is included —  pure fuel cooled all the way down to liquid type so it may be transported by ship —  the whole share of Russian fuel within the EU’s complete final 12 months was 15%.

A key manner the EU lowered its reliance on Russian fuel was by rising imports of LNG from nations such because the USA and Qatar. However, this has inadvertently led to a surge of closely discounted Russian LNG coming into the bloc.

Russia is definitely now the EU’s second-biggest provider of LNG, in accordance with the info supplier Kpler. The 15.5 million tonnes bought to Europe in 2023 accounted for 16% of the EU’s complete LNG provide. That’s a 40% enhance in contrast with the quantity of LNG Russia bought to the EU in 2021.

2023 import volumes had been barely down from 2022, however information from the primary quarter of 2024 reveals that Russian LNG exports to Europe have risen once more, by 5% year-on-year. France, Spain and Belgium have been significantly massive importers. Those three nations accounted for 87% of the LNG which got here into the EU in 2023.

The ‘trans-shipping’ drawback

Yet a lot of this LNG shouldn’t be wanted by the European market and is being dealt with at European ports earlier than being reexported to 3rd nations round the world, with some EU states and firms profiting consequently.

“A lot of the Russian LNG that goes to Europe is just being ‘trans-shipped’,” stated Hilgenstock. “So that has nothing to do with Europe’s natural gas supply. It’s just European companies making money facilitating Russian LNG exports.”

According to a latest report by the Centre for Research on Energy and Clean Air (CREA), slightly below 1 / 4 of Europe’s LNG imports from Russia (22%) had been trans-shipped to international markets in 2023. Petras Katinas, an power analyst with CREA, instructed DW that the majority of this LNG was bought on to nations in Asia.

As a end result, a number of EU members equivalent to Sweden, Finland and the Baltic States are placing stress on the bloc to enact a complete ban on Russian LNG, a transfer that will require the settlement of all member states.

EU discussions are at the moment centered on banning this reexport of Russian LNG from European ports. The sanctioning of key Russian LNG tasks, equivalent to Arctic LNG 2, the UST Luga LNG terminal and the Murmansk plant, are additionally being thought-about, in accordance with information company Bloomberg.

“We should really basically ban Russian LNG,” stated Hilgenstock. “We don’t think it plays any significant role for European gas supply, or it can be relatively easily replaced through LNG from other sources.” A 2023 research by the Bruegel assume tank backs up this evaluation.

Yet Acer, the EU’s power regulator, not too long ago warned that any discount of Russian LNG imports ought to happen “in gradual steps” to keep away from an power shock.

Austria and Hungary nonetheless piping it in

Pipeline fuel from Russia can also be nonetheless coming into the EU. Although the Nord Stream pipelines aren’t operational and the Yamal pipeline now not brings Russian fuel to Europe, Russian fuel nonetheless flows into Austria’s Baumgarten fuel hub through pipelines that cross Ukraine. The Austrian state-owned OMV power firm has a contract with Russian fuel firm Gazprom till 2040.

In February, Austria confirmed that 98% of its fuel imports in December 2023 had been from Russia. The authorities says it needs to interrupt the contract with Gazprom as early as doable however EU sanctions on Russian fuel are vital for that to occur legally.

Like Austria, Hungary has additionally continued to import pipeline Russian fuel in giant portions. Hungary additionally not too long ago struck a fuel take care of Turkey however consultants say this fuel, through Turkstream, can also be from Russia.

Hilgenstock says that some nations have continued to purchase Russian fuel as they’re benefiting from low cost, engaging contracts. “So unless and until there is an embargo on Russian natural gas, then it’s really up to these countries to do this,” he stated.

For nations equivalent to Austria and Hungary, a doable finish to their pipeline imports from Russia might finally be long-established by Ukraine. Kyiv insists it is not going to renew present offers it has with Gazprom to let fuel circulate through its territory. That settlement expires on the finish of 2024.

Time for an embargo?

Although Russian fuel remains to be coming into Europe, the general share it represents in Europe’s fuel imports has fallen dramatically since 2021.

The EU says it needs the bloc to be utterly freed from Russian fuel by 2027 and that objective seems more and more real looking says Hilgenstock. “I think if this entire, sordid affair has shown us one thing is that we can, in fact, relatively quickly diversify our supply of gas and other energy sources away from Russia,” he stated.

However, he believes the political situations “aren’t particularly conducive” for a complete fuel embargo at current, significantly a pipeline embargo. He factors to Hungary’s presidency of the EU within the second half of 2024 as a possible barrier. Budapest has nearer ties to Moscow than most EU member states.

On LNG, he’s extra optimistic and says in addition to EU motion, it’s as much as high-volume LNG importers equivalent to Spain and Belgium to take measures themselves.

“This backdoor importing of Russian gas is a huge problem, especially from a messaging point of view,” he stated. “And we’re helping Russia with its LNG supply chains, which we shouldn’t.”

Edited by: Uwe Hessler