Russia’s liquefied natural gas (LNG) exports remained strong in March, topping year-on-year levels despite efforts by some buyers to rein in purchases from the pariah state.
Russian LNG exports rose 19% annually to 3.1 million tonnes (Mt) last month, according to ship broker Banchero Costa. Deliveries from the country were also 25% higher than in March 2020.
Russia, the world’s fourth-largest LNG exporter, faced a series of financial and economic sanctions imposed by Western governments over its invasion of Ukraine in February. While the measures have exempted natural gas exports, some companies have avoided Russian energy products.
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The European Union is also aiming to become independent of Russian natural gas supplies by 2030, which could affect the country’s LNG export volumes before the end of the year. The EU relies on Russia for around 40% of its natural gas imports.
Last month, the block imported 1.7 Mt of LNG from Russia, or 26% more than the same period last year, Banchero Costa said. Imports of the super-cooled fuel have also increased by 22% since March 2020. The EU was the largest importer of Russian LNG last year, followed by Asia.
Banchero Costa analyst Ralph Leszczynski told NGI that last month’s Russian export gains were mostly related to long-term contracts rather than spot market purchases.
“If anything, buyers are importing more, bringing forward freight dates due to uncertainty about potential sanctions in the future,” he added.
Kpler analyst Laura Page added that Russia’s export volume this winter was also higher because a fourth train started operating at Yamal LNG in the country’s far north last year.
“To date, we have seen no slowdown in exports from the three Russian liquefaction plants,” Page told NGI. “Most volumes of Yamal and Sakhalin 2 will be sold through long-term contracts and these will continue.” However, Page noted that Taiwan’s CPC Corp. Reportedly not renewing his long-term contract with Sakhalin 2, which expires in March.
“In terms of spot volume, while there are certainly buyers in Europe and North Asia like Japan who are avoiding these loads, these loads are being sold. As a result, it’s pretty much business as usual at the moment.” She added.
Sakhalin deliveries to Asia
Japan remains a top destination for Russian LNG. Japanese buyers continue to accept contract cargoes from Gazprom PJSC’s Sakhalin LNG facility on Sakhalin Island, north of Japan. However, according to local media reports, some spot loads were turned away for fear of further sanctions.
Exports of LNG from Sakhalin in 2021 reached 10.1 Mt or 33.3% of Russia’s total. All of the plant’s cargo will be shipped to Asia, where Japan received the majority, or 6 Mt, last year, according to Banchero Costa.
Japan does not plan to withdraw from the Sakhalin 1 and 2 projects. These projects “are fundamental to energy security as the projects allow Japan to procure supplies below market price, especially given the current high energy prices,” Minister of Economy, Trade and Industry Koichi Hagiuda said during a press briefing in Japan Month.