EU Regulator Claims Europe Can’t Afford to Ditch Russian LNG Yet

Amid calls from some member states, the European Union should be careful in its efforts to ditch Russian LNG as it should protect its security of gas supply, the European Union Agency for the Cooperation of Energy Regulators, ACER, said in a report on Friday.

The Baltic EU member states have been calling for a ban on the bloc’s imports of LNG, but the EU’s watchdog believes that any such move should only be gradual.  

As the EU aims to completely end its reliance on Russian fossil fuels by 2027, “the reduction of Russian LNG imports should be considered in gradual steps starting with spot Russian LNG imports,” ACER said in its report ‘European LNG market developments’.

“While such measures may target to reduce dependence on Russian gas, it’s important to note that substantial volumes have already been contracted under long-term LNG agreements before the Russian invasion of Ukraine,” the EU regulator said.

“Hence, reductions in Russian LNG imports should be approached with caution, particularly in light of the imminent expiration of the ship-or-pay transit contract for gas pipeline supply from Russia to Europe via Ukraine by the end of 2024.”

The end of the pipeline shipment deal via Ukraine could lead to the EU losing 13.6 bcm of natural gas supply compared to the flows in 2023, according to ACER’s estimates.

The fact that neither pipeline gas nor LNG imports from Russia are banned, two years after Russia invaded Ukraine, shows the EU’s uneasiness to lose any gas supply as it is careful to avoid a spike in prices and a repeat of the 2022 energy crisis.

The EU is uncertain how to handle LNG imports from Russia in the short term.

The EU will soon allow individual member states to block imports of LNG from Russia without the use of sanctions by limiting access tox Russian gas to their gas systems.

Spain, the EU member with one of the largest LNG import capacities, is seeking tougher EU-wide coordination on handling imports of Russian LNG, Spanish Energy Minister Teresa Ribera told Bloomberg in an interview last month.

By Tsvetana Paraskova for Oilprice.com

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