In 2024, the European Union (EU) countries procured liquefied natural gas (LNG) from Russia at unprecedented volumes, with a total of 17.8 million tons of LNG delivered. Various projections indicate that these acquisitions will exceed 20% of the EU’s LNG imports by 2025, with a minimum of 20 million tons. It is anticipated that the current 40% proportion of US LNG will decrease to 35%, while Qatari LNG will not exceed 15%. France, Spain, Belgium, Italy, and the Netherlands are the biggest recipients of Russian gas.
Other LNG suppliers to the EU include Norway, Algeria (which collectively account for approximately 20%), Libya, Trinidad and Tobago, Nigeria, Equatorial Guinea, and, on occasion, the United Kingdom, Brunei, and Malaysia. In 2026, Canada intends to commence LNG exports to Europe, with Argentina following suit in 2027.
Russian LNG supplies in 2024 exceeded 2023 levels by nearly 3 million tons, as reported by The Guardian. Russian LNG’s transportation distances, which are 1.5 times shorter than those of Qatari LNG and three times that of the American, attract importers. Furthermore, the export prices of Russian LNG are generally lower than those of comparable products from the United States, Qatar, and Norway. NOVATEK administers the Yamal LNG complex, the source of approximately 55-65% of Russian LNG exports to the EU.
Bloomberg previously reported that European countries have failed to reduce their dependence on Russian gas, as they have begun purchasing record volumes of liquefied natural gas from Russia. This volume exceeds the volume of gas that was previously transported through Ukraine before Kyiv ceased pipeline transit of Russian gas.
Without the start of shipments from the Arctic LNG-2 plant, it is anticipated that Russia will continue to hold the fourth position among global LNG exporters. Analysts anticipate that Malaysia, currently ranked fifth, will not introduce substantial new liquefaction capacities in the next two years.
At the end of 2024, the Arctic LNG-2 project launched three Arc7-class icebreaking LNG carriers, Aleksei Kosygin, Pyotr Stolypin, and Sergei Witte. This project is currently subject to harsh sanctions. The United States, Qatar, and Russia are the primary producers that can meet the ongoing global development in LNG demand, according to NOVATEK. Despite Qatar’s vast reserves, including the shared South Pars field with Iran, it appears to have depleted its potential for new LNG ventures. Meanwhile, the United States, which primarily sources LNG from unconventional gas, faces challenges due to its high production costs. Furthermore, unless the Trump administration implements modifications, we expect the United States to implement stricter environmental regulations for the production and refining of shale gas in 2024.
It is not surprising that the United States does not “welcome” the increasing significance of Russian LNG in the European Union. In 2024, the Energy Information Administration (EIA) reported that US LNG exports averaged 241,000 tons per day. The commissioning of the Plaquemines LNG and Corpus Christi LNG Stage-3 facilities could result in a rise in this figure to 277,000 tons per day in 2025. However, geographic and price factors continue to constrain the expansion of US LNG in Europe.
Qatari LNG exports to Europe have to deal with obstacles, particularly as a result of the EU Directive on Corporate Sustainability Due Diligence, which goes into effect in July 2024. The directive mandates that companies identify and mitigate negative effects on the environment and human rights. In December 2024, Qatar’s energy minister, Saad Sherida Al-Kaabi, declared, “If I lose 5 percent of my revenue by supplying Europe, I won’t supply Europe. I’m not bluffing.”
Companies in the EU are required by the CS3D, which went into effect in July 2024, to assess their supply chains for environmental degradation and forced labor. International vendors such as QatarEnergy are apprehensive about the feasibility of continuing their operations under these regulations, as non-compliance could result in substantial financial penalties.
The Yamal LNG complex in Russia maintains the lowest global production cost of LNG at $0.60 per million British thermal units (MMBtu). NOVATEK’s total costs for delivering LNG to Europe, which include logistics, are comparable to domestic prices in the United States, ranging from $4.5 to $4.7 per MMBtu. The cost for Asian consumers is marginally higher, ranging from $5.5 to $6.0 per MMBtu. Alexey Grivach, the Deputy Director of Russia’s National Energy Security Fund, has stated that the EU’s sole affordable alternative will be Russian pipeline gas and Arctic LNG if US gas prices continue to increase.
Consequently, Russian LNG is fortifying its position in Europe over the long term, bolstered by its growth of new projects that continue in defiance of sanctions. For instance, Poland intends to augment its transatlantic LNG supplies using its Świnoujście center. Poland is pushing for the adoption of the 16th sanctions package against Russia by February 24, 2025, and the European Commission plans to start consultations with EU member states on January 14. Proposals to ban Russian pipeline gas imports and LNG, as well as nuclear technology cooperation, are included in the package.
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