After Lecturing India On Russian Oil Purchases, EU Imports Record Volumes Of LNG From Russia

Despite aiming to reduce its reliance on Russian fossil fuels by 2027, the European Union (EU) is projected to import record volumes of liquefied natural gas (LNG) from Russia this year.

This comes as the European block has been lecturing India over the past year on its oil purchases from Russia and also sought ban on Indian products made from Russian oil.

Global Witness, a nongovernment organisation, analysed industry data and found that Belgium and Spain were the second and third-largest buyers of Russian LNG, respectively, after China in the first seven months of the year.

Between January and July of this year, EU imports of super-chilled LNG increased by 40 per cent compared to the same period in 2021.

It is important to note that this increase is from a low base, as the EU had minimal LNG imports prior to the war in Ukraine due to its reliance on piped gas from Russia.

The EU's reliance on Russian LNG has grown despite its efforts to diversify its energy sources.

According to Global Witness, the increase in imports of Russian LNG by the European Union (EU) is much higher than the global average. While the global increase was 6 percent, the EU saw a sharper rise.

Based on data from industry analytics company Kpler, the analysis conducted by Global Witness reveals that the EU is currently importing around 1.7 percent more Russian LNG compared to the previous record high in imports last year.

The cost of the LNG imported by the EU from January to July, at spot market prices, amounted to 5.29 billion euros, according to Global Witness.

Jonathan Noronha-Gant, senior fossil fuel campaigner at Global Witness, expressed concern over the EU's shift from piped Russian fossil gas to LNG.

“It doesn’t matter if it comes from a pipeline or a boat — it still means European companies are sending billions to [Vladimir] Putin’s war chest," Jonathan was quoted as saying by The Financial Times.

Most of the Russian volumes come from the Yamal LNG joint venture, which is majority-owned by the Russian company Novatek.

France's TotalEnergies, China's CNPC, and a Chinese state fund also hold stakes in the venture. Although the venture is exempt from export duties, it is still subject to income tax.

The import levels not only result in billions of euros in revenues going to Russia, but also leave the EU vulnerable to any sudden decision by the Kremlin to cut supplies, as seen with piped gas last year.

According to Alex Froley, a senior LNG analyst at consultancy ICIS, "long-term buyers in Europe say they will keep taking contracted volumes unless it is banned by politicians".

Analysts have stated that Spain's utility Naturgy and France's Total have ongoing contracts for significant quantities of Russian LNG.

It should be noted that EU has over the past year criticised India for importing Russian crude oil and then shipping derived products to Europe, which they allege indirectly fuel Putin's war in Ukraine.

Earlier on Saturday (28 August), the EU again voiced concerns over the “rapid” rise in refined petroleum products made from Russian crude oil in India finding its way to the European market, saying it defies the purpose of the sanctions against Moscow that are aimed at reducing its ability to finance the war with Ukraine.

Speaking to the reporters during his visit to India, Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade of the European Union, said that oil products refined from Russian crude oil are entering the European market in “large quantities” and the organisation is looking into solutions.

The EU Vice President also accused Russia of using its energy supplies, and food as “tools” of “war and manipulation” to continue its attack on Ukraine.

In a bid to limit Moscow’s capacity to fund the conflict in Ukraine, the Western powers have imposed a number of sanctions on Moscow since Russia invaded Ukraine in February of last year, including a price ceiling on Russian oil by G7- plus nations.

“We are obviously aware that a number of countries, including China and India have not joined those sanctions. We are aware that Russia is actively seeking alternative markets for the lost European market,” Dombrovskis said.

The EU trade commissioner said this while asked about India’s increasing trade relations with Russia, especially its procurement of discounted Russian crude oil.

“We indeed see new trade patterns emerging. Those are some issues which are also the new developments which we are currently assessing. For example, what we see is now a rapid increase of refined oil products, so to say, imports in the EU from India," he said.

“But if they are made with Russian oil, in a sense it defies the purpose which we are putting in front of us as the EU, as a Western democratic world, to reduce Russia’s ability to wage the civil war,” he said.

“So this is something which will provide some reflection on that,” the top EU trade official added.

Earlier this year, EU Foreign Policy chief Josep Borrell has also called for fo action on imports of Indian-refined oil with Russian origins. 

“If diesel or gasoline is entering Europe . . . coming from India and being produced with Russian oil, that is certainly a circumvention of sanctions and member states have to take measures," Borrell was quoted as saying by the Financial Times. 

In response, India's Minister for External had said, “My understanding of the (EU) Council regulations is that Russian crude is substantially transformed in a third country then it is not treated as Russian anymore. I would urge you to look at Council’s Regulation 833/2014".

“There is, I think, no doubt about the legal basis of the sanctions," he said.

The minister further added that Europe has managed to reduce its imports while doing it in a manner that is comfortable.

"If at a (per capita income) of €60,000, you are so caring about your population, I have a population of $2,000. I also need energy, and I am not in a position to pay high prices for oil," he said.