The West increased imports of Russian energy resources despite its own sanctions

Europe does not disdain “toxic” liquefied gas from Moscow

The West, which has promised to completely abandon Russian energy resources, continues to regularly buy and pay for hydrocarbons from our country. Over the three quarters of this year, European importers bought up half of the liquefied gas produced by companies from Russia, spending more than 6 billion euros on it. True, the Old World has no other options: American fuel producers are raising prices, which, due to the cost of delivering raw materials, are becoming increasingly unaffordable for EU members.

Moscow continues “secret” sales of “blue fuel” to European countries. With these words, the British publication Telegraph commented on the latest trade statistics from Eurostat, which notes that the countries of the continent paid at least 6.1 billion euros for Russian LNG supplies over the 9 months of 2023. The largest buyers were Spain, which bought hydrocarbons worth 1.8 billion euros, France (1.5 billion euros) and Belgium (1.36 billion).

An increase in purchases of liquefied Russian gas was observed even by Moscow’s most ardent political opponents: Estonia and Lithuania, which purchase fuel mainly through intermediaries, paid up to 1 billion euros for Russian “toxic” hydrocarbons. European importers shift the blame for such financial transactions onto stock traders, who allegedly purchased additional fuel resources in the summer and are now trying to realize their savings by artificially increasing the cost of one-time offers.

“Statements about record purchases of Russian LNG can be considered market speculation, provoked not by the Russian side, but precisely by participants in the internal EU commodity market,” says Sergei Suverov, investment strategist at Arikapital Management Company, associate professor at the Financial University under the Government of the Russian Federation. There are no official sanctions regarding the export of “blue fuel” from our country: there is a certain set of restrictions that are included in the event of stock exchange quotes rising above $2,000 per thousand cubic meters. Since such claims do not apply when concluding agreements for the supply of LNG, domestic producers willingly continue to sell raw materials, taking advantage of high foreign demand.

“Europe boasts that by the current heating season it has filled its underground storage facilities to almost 100%. No one hides the fact that a significant share of this raw material was purchased not under long-term contracts from alternative suppliers (Middle Eastern and American mining holdings), but from market traders who repurchase energy resources directly at the point of delivery: in the Belgian ports of Antwerp and Zeebrugge,” the analyst notes. These transshipment hubs are actually directly connected to the North Sea and act as the most powerful and cheapest channel for supplying energy resources to Eurozone consumers. Russian exporters also sell their raw materials to these sites. The current structure of supplies of raw materials to the EU is determined by complex political and economic maneuvers. European countries are forced to buy more expensive raw materials, including from the United States. Delivery of hydrocarbons across the ocean increases the final cost of each cubic meter. Market quotes for “blue fuel” in Europe reach $52 per thousand cubic meters.

Of course, such an amount does not yet look exorbitant – in 2021, the cost of a thousand cubic meters broke through the $4,000 mark. Meanwhile, most likely, this is the cost of already contracted volumes. In other words, these raw materials were bought not by specific European consumers, but by the same stock exchange speculators: end buyers will have to enter into transactions for longer periods with a price premium, including the risks of further protective requirements against the supply of Russian fuel exports.

However, it is completely unclear who will be subject to penalties or lawsuits in this case. According to the chief researcher at the Institute of Economics of the Russian Academy of Sciences, Doctor of Economics Igor Nikolaev, if trade in Russian raw materials is carried out through transactions with independent exchange traders, then such transactions will be carried out on completely legal conditions, under which it will be extremely difficult to declare sanctions claims.

In the meantime, the picture on the European gas market is as follows. American fuel is constantly rising in price due to rising costs of transportation services. Seasonal winter frosts threaten to push prices up to $700 per thousand cubic meters. Russian LNG, which is now exported (according to unofficial information) at about 15-25% cheaper than the raw materials of international competitors, remains the main tasty morsel on global raw materials platforms.