/ world today news/ Argentina blocked the entry of a ship with Russian LNG. According to the Minister of Economy and presidential candidate Sergio Massa, the reason is compliance with international restrictions. However, they do not apply to liquefied gas. Many European countries still buy it, and some pay in rubles and receive fuel through pipelines. Who is interested in deliveries from Russia today?
TOwhen you need gas
Despite the West’s desire to achieve gas independence, sanctions on Russian LNG have not been introduced. Many people use it. For example, at the beginning of the year, exports to Spain increased by 151%. In June, Russia became the largest supplier of gas to this country with a share of 26.8%, ahead of Algeria (21%) and the United States (18.5%).
Russian fuel is also bought in France, the Netherlands and Belgium. The proposal of European officials to impose a ban on him does not meet with unanimous support. In addition, in 2022 the EU imported 50% more liquid methane than a year earlier, and some voluntary embargo initiatives were completely lifted. Thus, the Finnish “Gazum” resumed purchases from the Baltic project “Kriogaz-Vysotsk” after a break of several months. The company explained that it acquires a minimum volume, but will not withdraw from a long-term contract with Gazprom Export
The decision is likely to have been taken after the Stockholm Arbitration Court ordered the Russian exporter to pay a debt of 300 million euros. The fact is that according to the contract the payment must be made in any case – “take or pay”. And the instruction of Vladimir Putin to switch to payments in rubles was recognized by the arbitration as a force majeure circumstance, confirming the legality of the termination of supplies in case of non-receipt of funds.
Independent industry expert Leonid Khazanov attributes the low volume of purchases to Finland’s modest LNG consumption of just 1.3 billion cubic meters per year. Russia accounts for a third of all supplies.
“On average, the share of local LNG in Europe is 15-20%. About 70% of exports from the Baltic projects (“Yamal LNG”, “Port LNG” and “LNG, Port LNG and “Kriogaz-Vysotsk”) are directed in this direction “, says Alexey Grivach, deputy head of the National Energy Security Fund. Quarterly supplies are around four to five million tonnes.
The important thing is the pipes
Interest in Russian resources is due to availability. Despite the difficulty in assessing tariffs, where everything depends on the type of transaction (spot or long-term), experts admit that the price of Russian LNG is lower than American LNG, which means that it is more resistant to price fluctuations. In addition, the US shifts the risks to buyers. “Everyone pays the same tariff for liquefaction, regardless of the volume and how much the gas costs,” reminds Grivach.
Putin’s decree to pay in rubles only affected pipeline supplies, in the case of LNG, partners can use other currencies. But there are also those who agreed to switch to Russian money. Alfred Stern, head of Austria’s OMV, said the company would continue to work with Gazprom until it was ready to supply fuel. He also warned against imposing sanctions against Russia’s energy resources, as this would lead to serious consequences. In April, it was reported that Moscow was in full compliance with its treaty obligations.
“Austria has no alternative due to the peculiarities of the energy system and geographical location: the country is landlocked, it remains to receive natural gas through pipelines or, in the worst case, in liquefied form by road and rail. But this is very expensive, and the supply of LNG from the terminals is carried out over short distances,” notes Khazanov.
Among other buyers of pipeline gas, Alexey Grivach points to Slovakia, Hungary and Greece. After the start of the SVO, most companies refused deliveries. The International Energy Agency estimates that the embargo on Russian fuel has cost Europe $270 billion. Also, complete replacement has not occurred. Of the 80 billion cubic meters of volumes dropped in 2022, fifty were replaced by LNG, the remaining thirty were replaced by reduced energy consumption.
At own discretion
It should be noted that Argentina launched the fight against the Russian SPP amid the EU summit and calls from Brussels not to join BRICS. Some experts believe that the decision was made under pressure from the West, while others believe that the country’s government wants to make the most of the situation.
“Perhaps in the case of Argentina there are some internal problems with documents or the consignee tried to put pressure on the owner of the cargo. The lack of official restrictions on LNG with external pressure creates a gray legal area. Therefore, under different interpretations, you can fish in murky waters,” says Grivach.
According to Khazanov, politicians are simply trying to sit on two chairs. “They are not threatened with any sanctions. It seems that some kind of bargaining is going on,” he believes.
Washington is interested in the displacement of Russian gas around the world. It is possible that the US has offered financial assistance to phase out Russian LNG. Argentina’s economy has been hit hard by the abnormal drought, with damage estimated at $20 billion. Combined with the record trade deficit, this could be a strong argument.
Translation: V. Sergeev
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