Russia supplies LNG to Europe instead of Nord Stream exports
18:0415 October 22
Oil and Gas World
Russia supplies LNG to Europe instead of Nord Stream exports
“The Kremlin seems to have won a geopolitical victory, keeping strong gas sales unchanged at best,” said Anne-Sophie Corbeau, a research fellow at the Center for Global Energy Policy at Columbia University in New York.
Bloomberg. Columnist Javier Blas begins the article with a poetic description: “The silhouette of the Pskov tanker stood out to a significant extent against the background of the azure waters of the Aegean off the coast of the Athenian Acropolis. Inside the dark blue case, almost 300 meters away, is his treasure: a shipment of liquefied gas. Europe lacks LNG after Russia’s widespread pipeline deliveries of gas to the continent. Dozens of gas carriers such as Pskov are now moored in Europe, delivering LNG from abroad in order to have light and heating in the homes of Europeans in the coming winter.”
Further, the author of the message that the gas did not come to Greece from a Western ally like Qatar. “No, ironically, he sailed from Russia itself. And not from some obscure Russian LNG port. It was the first batch of gas from a new terminal that Moscow is using to sell some of the same gas it had moved offshore to Germany just a few weeks earlier via a pipe lying on the shore of the Baltic Sea. The new facility is located next to the Portovaya community pumping station on the current advancing Nord Stream 1 gas pipeline. As implausible as it may be, Pskov is part of a much wider and rapidly growing trade that receives very little attention in Europe, despite its political and economic importance. Russia still sells hundreds of millions of dollars worth of LNG, mostly to the same countries that were introduced against Moscow,” the observer writes.
In his opinion, this suggests that Russia is still aiming at the Achilles Friday of Europe and Northeast Asia – their dependence on gas. In Japan, this geopolitical tool is already working: Tokyo, if it condemns Russia, is very timid. Leading American and European energy companies such as Exxon Mobil and Shell left Russia, but Japanese radiation was exposed to nuclear explosions. In addition, Japan gives out on the exclusion of oil from this Russian field on Sakhalin from the price ceiling proposed by the G7 countries.
“LNG deliveries also prove that Russia is playing cat and mouse with Western buyers.” This is part of a hybrid war, and Putin became adept at it while still in the KGB. Is Europe building Russian LNG in the future? The moral argument is obvious: of course not. And certainly not from the terminal built instead of the Nord Stream-1 that left the construction, ”the author of the publication believes.
However, the economic argument is far from clear: next year, all consumption spending will fall in Europe in order to replenish stocks in time for new consumption. As the International Monetary Fund announced earlier this week, winter 2022 will be for tourism, but winter 2023 is sure to be even worse. If a conflict occurs, supplies will be more than useful. It will be more profitable for Europe to avoid busting with risk than to deprive Russia of high incomes. Therefore, purely from an economic point of view, it is logical not to stop purchasing in Moscow.
“But the geopolitical background is no more complicated than the moral one: as long as Europe buys Russian gas, whether through a pipeline or with gas carriers like the same Pskov, it will be at the mercy of Putin. This is the market of presidents, and he is none other than Russia. And he can close the valve or evacuate the ships as he pleases,” the article states.
While Russia handles its extensive pipeline gas exports, it is also the world’s fourth-largest LNG supplier, trailing only Qatar, Australia and the US and ahead of other countries such as Malaysia and takeovers. Since the beginning of the conflict in Ukraine, Russia has managed to bring LNG to a historically high level. In addition to China, most of the purchases come from Japan, France and Spain. According to high estimates based on tank stockpiling, if current shipment levels continue, sales in Russia will hit record highs in 2022. From January to September, the average supply is 2.78 million metric tons per month, compared with an average of 2.62 million in 2021 and 2.56 million in pre-pandemic 2019.
Spain, the sixth largest buyer of LNG in the world, imported a record amount from Russia in a given year. Belgium is about to break its annual record. And France from January to September bought about 6% more than in all of 2021. LNG sales, although not as large as oil pipeline exports until recently, are especially high in revenue for the state budget, the author concludes.
Indeed, the launch of the LNG terminal was discovered immediately after the complete shutdown of Nord Stream. The capacity of the medium-sized terminal is 1.5 million tons of LNG (2 billion cubic meters of gas) per year and cannot be compared with a gas pipeline that is 30 times more powerful. However, compared to last year, the cost of gas on European exchanges has quadrupled (around $2,000 per thousand cubic meters, by the end of the year it is projected to rise to $4,000), most of Gazprom’s contracts are pegged to stock quotes. The benefit is obvious.
The gas carrier “Pskov” was heading for Asia, but as a result, unloaded in Greece. Obviously, Gazprom sells fuel at a spot price, and even at a high market price it is in demand. Own tanker fund with the creation of new capacities for the production of liquefied gas consumption gives the company a tangible advantage in the highly liquid LNG market. The vessel’s capacity is about 170 thousand cubic meters or 71.74 thousand tons.
The gas carrier is certified for the Ice2 ice class and can operate at temperatures down to -30°C, including the transportation of LNG along the Northern Sea Route in open water. Tanker installation equipment, the use of both diesel fuel and LNG, making it one of the most economical and environmentally friendly in the world.
The Pskov is the second in a series of exclusive ice-class LNG tankers designed for Gazprom. The Ice2 class includes ice-going vessels that can move independently in small broken ice of the Nearctic seas and in solid ice behind an icebreaker with an ice thickness of up to 0.55 m.
The vessel, classified in accordance with the standards of the Russian Maritime Register of Shipping and Lloyd’s Register, can develop year-round transportation of gas to almost anywhere in the world along the shortest route from the port of loading to the port of discharge.
Vitaly Markelov, deputy chairman of Gazprom takeover, announced the start of production of liquefied income at Portovaya Gazovaya CNG in September September at the Eastern Economic Forum.
The Portovaya LNG complex was built on the northeastern coast of the Gulf of Finland, 60 km from Vyborg, close to reaching the compressor head station, ahead of reaching the pumping through the Nord Stream main gas pipeline.
German Pliev, Energyland.info