Vladimir Putin decided to take advantage of the situation in the Middle East. He proposed that LNG supplies that are still flowing to Europe should be redirected to Asian markets. This would be a blow to the Old Continent, which is currently struggling with another energy crisis. However, experts note that it is not that simple.
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It should be noted here that despite political declarations and the decision last year to completely suspend Russian gas supplies to Europe, the road to cutting off Moscow from the European market is still long. Bloomberg reminds that at the beginning of this year, Russian Yamal LNG was responsible for almost 18 percent. import of liquefied gas to the EU.
Energy expert Ronald Smith from Emerging Markets Oil & Gas Consulting Partners emphasizes that the only Russian gas that could be redirected from Europe to Asia is that from the Yamal LNG project. Supplies from other Russian installations are already blocked by sanctions.
Long-term contracts and no force majeure clause
Experts cited by Bloomberg indicate that redirecting Yamal LNG supplies to Asia is not a simple process.
Agnieszka Ason, a lawyer specializing in energy, explains that a decision to give priority to other markets does not qualify as “force majeure”. That is, Russia would have to take into account financial penalties for violating applicable contracts.
Another issue that experts pay attention to is logistics. Yamal LNG goes to Europe through the port in Murmansk, from where the distance to France or Belgium is approximately 1.6–1.8 thousand km. nautical miles. It would be one thing if he were to suddenly sail to Asia, where he is over 12,000 miles away. nautical miles.
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“Additional gas carriers will be needed to service longer routes,” notes Ronald Smith. He estimates that redirecting all Yamal exports to Asia would require the use of about 60 gas carriers. Currently, only 17 ships handle exports to Europe.
Russia is looking for new markets
Deputy Prime Minister of Russia Aleksandr Nowak, quoted by the Interfax agency, said on Friday: that redirecting LNG supplies from Europe to Asia is possible in the near future. However, he did not provide a specific schedule.
“Some of the LNG volumes currently delivered to Europe will be redirected to other markets where constructive, pragmatic relations with our country are built, where there is demand and the possibility of concluding long-term contracts” – said Nowak.
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Russia's Novatek PJSC, the main shareholder of the Yamal LNG project (50.1%), and France's TotalEnergies SE (20%) refused to comment on this matter. A similar position was taken by European companies such as the Spanish Naturgy Energy Group and the German SEFE, which are the main recipients of cargo from Yamal.
