The EU may ban imports of liquefied natural gas from Russia

Sergey Kondratiev, Principal Director on Economic Studies at the Institute for Energy and Finance, commented to Business FM on Russian LNG supplies to the EU:

“Now this ban may be relevant for the EU. Gas prices are low, stocks are high, LNG market supply is high, and this may create the conditions for discussing a ban. But I do not think that such a long-term ban will be introduced for Russian suppliers in the near future. On the horizon of several years, such sanctions can indeed be introduced. If we talk about who will suffer, then this is Novatek and many large European companies that act as its partners and with whom it has signed long-term contracts for the supply of gas from Yamal LNG. Most contracts are concluded for 15-20 years, they expire in the mid-2030s, closer to their end. This means that these volumes, these companies - French Total, Spanish companies, companies from other European countries - will have to be redirected to other markets. With a high probability it will be the Middle East, possibly South Asia. Although from the point of view of logistics, these will be quite complex decisions. The impact on Novatek will be relatively limited because it will have to divert up to 25-30% of Yamal LNG's liquefied gas production, including both its share of the volumes that goes to the European market and the share that is sold on the spot. I think it is possible, but there may be questions about the sustainability of such supplies, in terms of the need for a fleet of gas carriers. And with an increase in the current transport leverage, this will lead to a decrease in marginality. I would not say that under the current conditions such a ban is real and can be introduced quickly.”