Russia’s liquefied natural gas (LNG) exports remained strong in March and surpassed year-ago levels despite efforts by some buyers to curb purchases from the pariah state.
Russian LNG exports increased by 19% year/year to 3.1 million tons (Mt) last month, according to shipbroker Banchero Costa. Shipments from the country were also 25% higher than they were in March 2020.
Russia, the world’s fourth largest LNG exporter, has faced a series of financial and economic sanctions imposed by Western governments for its invasion of Ukraine in February. While the measures have exempted natural gas exports, some companies have shunned Russian energy products.
The European Union is also aiming to gain independence from Russian natural gas supplies before 2030, which could ultimately dent the country’s LNG export volumes before the end of the year. The EU relies on Russia for about 40% of its natural gas imports.
Last month, the bloc imported 1.7 Mt of LNG from Russia, or 26% more than it did during the same period last year, Banchero Costa said. Imports of the super-chilled fuel were also up by 22% from March 2020. The EU was the largest importer of Russian LNG last year, followed by Asia.
Banchero Costa analyst Ralph Leszczynski told NGI that Russian export increases last month were mainly related to long-term contracts and not purchases on the spot market.
“If anything, buyers are importing more by bringing forward the cargo dates due to uncertainty about possible sanctions in the future,” he added.
Kpler analyst Laura Page added that Russia’s export volumes have also been higher this winter because a fourth train at Yamal LNG in the country’s Far North came online last year.
“We haven’t seen any slowdown in exports from the three Russian liquefaction plants to date,” Page told NGI. “Most of the volumes from Yamal and Sakhalin 2 are sold via long-term contract and those are continuing.” Page noted, however, that Taiwan’s CPC Corp. reportedly did not renew its long-term contract with Sakhalin 2 when it expired in March.
“As for spot volumes, while there are certainly buyers shunning away from these cargoes” in Europe and North Asia like Japan, “these cargoes are being sold. As a result, it’s pretty much business as usual at the moment.” she added.
Sakhalin Deliveries to Asia
Japan still 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, some spot cargoes have been turned away for fear of further sanctions, according to local news media reports.
Exports from Sakhalin LNG reached 10.1 Mt in 2021, or 33.3% of Russia’s total. All the facility’s cargoes are delivered to Asia, where Japan received the bulk, 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 essentially important for energy security because the projects allow Japan to procure supplies below the market price, especially amid current high energy prices,” Minister of Economy, Trade and Industry Koichi Hagiuda said during a press conference this month.
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