Russian LNG exports reached a maximum in October due to increased supplies to Japan from Sakhalin-2

Exports of liquefied gas from Russia in October reached a maximum this year of 2.98 million tons due to an increase in supplies to Japan from Sakhalin-2 and the completion of repairs at the main plants. However, in annual terms, deliveries decreased by 4.9%. In the summer months, exports from the Russian Federation decreased noticeably due to planned technical work at Sakhalin-2 and Yamal LNG. Over ten months, the Russian Federation exported 26.18 million tons of LNG, which is 3.8% lower than a year earlier. According to analysts, due to lengthy repairs, LNG production in Russia at the end of 2023 will not reach last year’s level, even despite the launch of Gazprom’s Port LNG project.

Russian LNG exports recovered in October after summer repairs at key production facilities and reached their highest levels in 2023, according to Kpler data. In October, shipments from the Russian Federation reached 2.98 million tons, which is 4.9% lower than a year earlier. In July and August, due to planned technological repairs on the Yamal LNG and Sakhalin-2 liquefaction lines, LNG exports from the Russian Federation decreased to 2 million tons per month; in September, shipments amounted to about 2.6 million tons.

Over ten months, shipments from the Russian Federation decreased by 3.8% year-on-year, to 26.18 million tons of LNG. Of these, 12.8 million tons went to Asia, 12.35 million tons to Europe, 0.5 million tons to Turkey. The largest volume of supplies in January-October fell to China, where it grew by 21% year-on-year, to 5.93 million tons. 4.7 million tons were supplied to Japan (a decrease of 17.5%). Also among the major importers of Russian LNG are Spain, which received 4.14 million tons in January-October, Belgium (3.86 million tons), France (2.65 million tons).

The main volumes of Russian LNG exports come from NOVATEK’s Yamal LNG plant and Gazprom’s Sakhalin-2 plant. The latter is completely focused on deliveries to Asia. Gas is also shipped abroad from medium-tonnage projects – Gazprom’s Port LNG and Cryogaz-Vysotsk (a joint venture between NOVATEK and Gazprombank).

The Russian Federation remains a significant supplier of LNG to Europe, despite the reduction of pipeline supplies by Gazprom. The European Commission has not yet introduced restrictions on Russian LNG, although it has called for a reduction in purchases and not to renew long-term contracts with Russian suppliers.

Meanwhile, Brussels has begun developing the 12th round of sanctions against the Russian Federation. In a non-binding resolution dated November 9, the European Parliament called on EU countries to completely abandon Russian LNG. But the likelihood of such measures being taken in practice is low, since Europe remains vulnerable to fluctuations in the supply of LNG on the market.

At the same time, the growth of LNG exports from Russia is under threat due to tightening sanctions: for example, the United States has imposed blocking sanctions against NOVATEK’s Arctic LNG 2 project, which is scheduled to begin shipments in the first quarter of 2024.

The largest increase in LNG exports in October came from Sakhalin-2, shipments from which reached their highest level since December 2022, notes Victor Katona from Kpler. “If you look at the distribution of volumes, Japanese companies have maximized their purchases – since January 2021 there has not been such a quantity of Sakhalin LNG in the direction of Japan,” he says. The analyst also draws attention to the fact that shipments were made not only under long-term contracts, but also a number of spot deals were concluded. He explains the growing interest in Russian LNG on the part of Japan by strikes at the Australian Gorgon and Wheatstone plants, which greatly frightened Japanese buyers.

According to independent expert Alexander Sobko, due to repairs at major projects, LNG production in Russia this year will be around 32 million tons and will not reach last year’s level (33 million tons). The decrease will occur despite the fact that in 2023, production of the Port LNG plant of 1.5 million tons, which was launched at the very end of 2022, was added to the total volumes.

Tatiana Dyatel