Analyst explains increase in Russian LNG supplies to Europe
By Asif Aydinli
Igor Yushkov, leading analyst at the National Energy Security Fund and expert at the Financial University under the Government of the Russian Federation, stated in an exclusive interview with News.Az :"In recent years, there has been a significant increase in the volumes of liquefied natural gas (LNG) shipments from Russia to Europe. Despite numerous sanctions and attempts to restrict Russian exports, the supply levels remain high."
According to Yushkov, the primary reason for the rise in LNG deliveries from Russia to Europe is the comparable pricing between the Asian and European markets. "The cost difference is minimal," he explained, "making shipments to Europe profitable, especially from the Yamal LNG project, which accounts for the vast majority of these supplies."
He noted that for this project, 15 Arctic-class Arc7 tankers were built — the highest Arctic classification for such vessels. "There are no other tankers like them in the world; they were specifically designed to transport LNG from Yamal to Europe. This fleet allows for rapid unloading and quick return trips to pick up new loads, as the tankers were constructed based on the plant’s designed capacity of 16.5 million tons per year. Later, a fourth smaller line was added, increasing the capacity to 17.4 million tons, but the actual production has already reached 20 million tons per year. In reality, production is limited by the number of tankers, which simply cannot manage to transport more," Yushkov said.
He pointed out that supplying LNG westward is more advantageous due to lower ice coverage throughout the year, enabling the tankers to deliver gas faster and return for new shipments. "This year, an additional factor came into play: Europeans banned the transshipment of Russian gas in their ports as part of the 14th sanctions package ," Yushkov added. Previously, Arctic tankers could arrive at ports in Belgium, France, and other countries, unload there, and then return to Yamal for a new load. The transshipped LNG would then be transported further to Asia by non-ice-class tankers via the Suez Canal or around Africa. "Now, with the ban on transshipment, Russian volumes remain on the European market, saturating it and driving prices down," he explained.
Yushkov mentioned that, in theory, it is possible to transship LNG in the waters of the Murmansk region from Arctic tankers to conventional ones, but this happens less frequently, and supplies predominantly go to Europe. He added that another reason for the increase in shipments is the disruption of the route through the Suez Canal, which makes transportation to Asia more complicated and expensive.
"For international traders who purchase LNG, this presents an additional risk factor. In the summer, tankers can turn eastward straight from Yamal, but navigation through the eastern part of the Northern Sea Route is only possible from late May to November," Yushkov clarified. During the rest of the year, the ice conditions are too severe, and even Arctic tankers move slowly or require the assistance of nuclear icebreakers, which raises delivery costs.
"Therefore, it is simpler and more profitable to supply LNG to Europe," he concluded. "There is no sense in competing for the Asian market when prices are similar, and shipments to Europe can be easily arranged. These factors are precisely what contribute to the increase in Russian LNG deliveries to European countries."
Similar news
