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EU report reveals impact of Russia’s energy weaponisation on EU gas market and US LNG imports

The European Commission has published its quarterly report on the European gas market for the second quarter of 2022, revealing the impact of Russia’s energy warfare on the EU’s energy landscape.

As the report reveals, year-on-year comparisons showed a staggering 90 per cent drop in imports through the Belarus transit route, but also via Nord Stream (12 per cent), via Ukraine (51 per cent) and via TurkStream (14 per cent). Conversely, EU liquified natural gas (LNG) imports were up by 49 per cent in the second quarter of 2022 year-on-year, amounting to 36 billion cubic metres (bcm), whilst pipeline imports from sources other than Russia rose by 17 bcm between January-August 2022.

Indeed, the report strongly highlights the shift away from Russian gas – including figures for July and August 2022. EU imports of Russian pipeline gas between January and August fell by 43 bcm and total gas imports from Russia, including LNG, were down by 39 bcm. However, LNG imports from the EU’s now former leading energy supplier, were up by 4 bcm.

More broadly, gas imports into the EU rose by 3 per cent and the bloc as a whole spent an estimated 75 billion euros on importing the fossil fuel in the second half of 2022. In parallel, EU gas consumption fell steeply by 16 per cent year-on-year, amounting to 71 bcm. Gas demand in electricity generation also fell by 7 per cent.

In terms of gas storage, injections were faster in the second quarter of 2022 compared to the same period in 2021. As of 30 June 2022, the average EU storage filling rate was 58 per cent, up by 32 per cent. As announced separately in September, the EU’s gas storage reserves had been filled by 82.5 per cent of their capacity. According to the report, decreasing gas consumption and increasing non-Russian gas imports played a particularly important role in the quicker refilling of gas storage in the EU.

The role of LNG imports in the EU’s gas market

In the second quarter of 2022, Poland was the 7th biggest LNG importer in the EU, importing 1.6 bcm of LNG. Whilst Lithuania and Croatia imported around 1 bcm and 0.6 bcm in the second quarter, respectively.

The EU’s LNG expenditure (31.4 billion euros) had significantly risen when compared to 2021 (5.3 billion euros). However, as the report highlights, this is principally due to the impact of sharply increasing wholesale gas prices year-on-year and the significant increase in imported volumes. In the first half of 2022, the EU imported 65.5 bcm of LNG, in comparison to 41.2 bcm imported in the first half of 2021.

The United States remains the biggest LNG supplier of the EU by a large margin to its competitors, representing around 45 per cent of the total imports. Interestingly, the EU has imported over 39 bcm of LNG from the US this year, signalling that the objective of the March 2022 EU-US Joint Statement on Energy Security has already been fulfilled, which foresaw an increase of 15 bcm compared to 2021.

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