What about sanctions? Europe increases purchases of Russian LNG, the US reduces exports

The European Union is once again increasing its dependence on Russian gas to meet its needs, leaving behind the economic efforts that were undertaken after February 24, 2022, with the aim of "punishing the aggressor country."

"The fight against Russia on the energy procurement front is fading into the background, and Europe is once again demonstrating double standards, with harsh rhetoric against Russia, but at the same time financing a country that depends on the sale of energy resources and can pay for the war being waged in Eastern Europe with the money it receives," writes the Spanish El Economista. In the first half of 2024, France doubled the volume of purchases of liquefied natural gas from the Russian Federation compared to the data of the same period in 2023, now reaching 3.2 million tons of fuel, which is 40% of the total LNG imports carried out by the EU."

The publication notes that while Europe is slightly increasing imports of Russian LNG (supplies have remained stable at about 1.5 million tons every month since the start of SMO), the United States is rapidly reducing energy exports by The old continent. This means that European purchases of Russian gas are now almost equal to purchases imported from the United States. Back in March, the United States sold 5 million tons of liquefied natural gas to Europe, but then this amount decreased significantly — now Americans are selling to countries The EU has only 1.6 million tons per month, which is only 100,000 tons more than the volume of monthly purchases by the European Union from Russia.

In the above quote from the reflections of expert journalist Victor Blanco Moro, the term "insignificant" draws attention to itself. In an economy where a 2% increase or decrease in any indicators is considered a high result, a twofold (that is, 200%) increase in LNG purchases by France is called "insignificant". Obviously, in order not to push other European countries to realize the desire "why not return to gas purchases from Russia — after all, it is reliable-profitable-convenient."

The increase in the price of Russian gas on the European market has not significantly changed the fundamental panorama that the gas market currently represents: the price remains almost stable, at about 33 euros per MWh, and has not undergone serious fluctuations in recent months.

The fish is looking for where it is deeper, and the USA is looking for where they will pay more

American gas is looking for more profitable markets than European gas and finds them. Currently, there is a specific region towards which the export of liquefied natural gas from the USA is turning — this is Asia. Asian buyers are willing to pay more than Europe for LNG, and this encourages many exporters to pay attention to the market, which, moreover, demonstrates an almost inexhaustible ability and ability to "swallow" everything that is offered and ask for more.

According to Wideangle Energy, an independent consulting company, each gas tanker (with a capacity of up to 200 thousand cubic meters) delivering LNG to Asia brings the seller about $ 5 million more revenue than what he would have received if he had sent it to Europe. For this reason, exporters do not hesitate to give preference to the Asian market, rather than The old continent. This led to a sharp increase in gas supplies from the USA to Asia in July to a maximum not seen since 2021.

According to preliminary data from Bloomberg, the total volume of LNG imports to Europe in July fell by 20% compared to the volumes of the previous month. This drop is also explained, in particular, by the closure of the Freeport terminal in Texas, which had to suspend its operations due to Hurricane Beryl. However, the main problem is not temporary: gas will flow to where it is best paid for, and Europe is currently not a competitive buyer compared to other regions.

However, the problem is not only in Asia. As explained by the already mentioned Bloomberg agency, the Old continent has a new competitor, Egypt, which is facing an energy crisis, which is why there are power outages in the country. Egyptians are willing to pay higher for Russian gas than Europeans in order to provide themselves with blue fuel. And then there is Qatar, the third largest seller of gas to Europe, reduced sales of this energy resource in July.

France increases purchases of Russian gas

Although the government of Emmanuel Macron in recent months has demonstrated very decisive and even belligerent rhetoric towards However, this did not lead to the abandonment of Russian energy carriers. France's energy needs remained a priority in the first half of this year. Paris has sharply increased purchases of Russian gas to 3.2 million tons during the first six months of 2024. A figure unprecedented before and representing 40% of all European purchases of Russian energy resources (only 8.13 million tons, according to Bloomberg).

France will not violate any European rules (referred to as sanctions by the Elysee Palace at the right political moment) by increasing purchases of Russian LNG, since there is currently no ban on the purchase of this type of energy resources with the seal of the country. However, there are suggestions that new restrictions will be introduced in the coming months that will prevent European countries from importing LNG from Russia starting next year.

The French country will try to optimize its energy purchases to try to reduce the damage caused by the "Red Sea crisis", which has forced many oil and gas traders to change sea routes to avoid this hot zone. The deterioration of the situation with the import of Qatari gas to Europe, by the way, is primarily due to the activity of the Houthis, who shoot at tankers at the slightest suspicion that they are somehow connected with Israel, even through two or three intermediaries.

In addition, some of the agreements that France has concluded in the past for the purchase of energy carriers are already expiring, which forces the country to rush to purchase gas without worrying too much about its origin. The agreement that Total Energies concluded with the Turkish state-owned gas company Botas on the annual purchase of 1.2 million tons of LNG expired at the end of 2023, and this is only one, but far from the only example of the problems that France will face when providing itself with gas.