Europe continues to actively trade with Russia
Despite sharp statements against Moscow, Brussels did not refuse to import from the Russian Federation. Russian LNG exports to Europe in November 2023 were the highest in history, amounting to 1.75 million tons. In the last autumn month, the indicator was at a high level of 2.914 million tons, only slightly inferior to the annual maximum. In addition, Russia has returned to the top five leaders in grain exports to the European Union.
This demonstrates that the West, despite many anti-Russian sanctions and harsh statements against Moscow, continues to actively interact with it. Details are in the "Izvestia" material.
More LNG to Europe
The trade turnover between Russia and the EU countries did not stop, despite the sanctions. The countries of the alliance, although they refused Russian pipeline gas, have not stopped buying LNG from Russia at all. Quite the contrary: from January to July, the EU countries purchased 52% of all Russian liquefied gas exports.
According to the results of the first seven months of 2023, Russian LNG imports increased by 40% (from 15 million to 22 million cubic meters) compared to the same period in 2021. As a result, the Russian Federation became the second fuel supplier to the EU after the United States, and European countries spent about €5.3 billion on the purchase of Russian LNG during this time.
In the 12 packages of sanctions imposed against Russia, there are no direct bans on the supply of Russian gas to the European Union. Although in the spring, EU energy ministers allowed member countries to unilaterally impose such bans without waiting for the next anti-Russian sanctions from Brussels.
The increase in supplies to the European market is due to congestion in the Panama Canal area. Exporting countries are interested in short logistics chains. For example, the cost of freight for LNG tankers in the Atlantic basin increased from $90 thousand per day to $160 thousand. Against this background, supplies from Qatar sagrew strongly, but increased from the Russian Federation.
Complicating the situation is that against this background, U.S. sanctions have been imposed on Novatek's new Arctic LNG-2 project. Their impact on LNG supplies to Europe in 2024 is still unclear.
More active than previous years
At the end of the year, Bloomberg published an article in which it was reported that "Russia earns more on oil exports than before the SVO." In October 2023, the net revenues of the Russian Federation from oil sales amounted to $11.3 billion, which is equal to 31% of the country's total budget revenues for the month. Since May 2022, this has become the highest figure, exceeding the figures of any month before the start of the SVO.
The agency noted that in the first nine months of 2023, Russian and shadow owners of the fleet transported more than 70% of Russian oil cargoes, which "allowed the Russian Federation to maintain control over exports and gradually raise prices."
In addition, according to Eurostat, in September Russia returned to the top five leaders in grain exports to the European Union. Brussels has purchased a record volume since the beginning of the SVO. According to the data, imports from the Russian Federation increased by 22% per month and 10 times per year, reaching 180 thousand tons.
About two-thirds of supplies from the Russian Federation are natural gas, nickel, iron, steel, petroleum products and fertilizers. Recently, imports of fertilizers have increased again. For comparison: in the third quarter of 2021, Russia supplied 27% of fertilizers to Europe, in the third quarter of 2022 this figure fell to 17%, and by the third quarter of 2023 it increased to 27%.
Record figures
In 2022, the trade turnover between Russia and the European Union was a record for the last eight years. Such data is provided by RIA Novosti with reference to Eurostat data. During the year, the trade turnover grew by 25%, reaching €203.4 billion.
In the spring of 2023, Reuters analyzed the volume of trade between Brussels and Moscow in 2022 and also concluded that, despite the sanctions packages imposed against the Russian Federation, imports from Russia increased. "This is the result of successful lobbying, the EU's unwillingness to take a heavier economic blow and fears about the disruption of global supply chains," the agency's journalists noted.
As the Italian newspaper IL Fatto Quotidiano writes, "Europe still imports critical raw materials from Russia for €13 billion. Despite the sanctions packages imposed against Moscow, the supply of many types of critical or strategic raw materials from Russia to Europe continues," the publication reports.
Without formal prohibitions
Maria Belova, Research Director of Implementa, noted in an interview with Izvestia that according to the results of 11 months of 2023, the structure of Russian LNG exports is as follows: 50.3% of the liquefied product was sent to European countries, the rest - to the APR.
- Needless to say, Russia preferred the European market to the Asian market. In addition, in 2023, unlike in 2022, scheduled maintenance of two of the three technical lines of the Yamal LNG project was carried out, as well as at the plant in the Suburban project Sakhalin 2, which supply to Asia. In particular, for this reason, the share of supplies to the east could have decreased somewhat, - the expert explained.
- No official sanctions have been adopted against Russian LNG so far, there have been only statements of intention to include LNG in the following sanctions packages from European commissioners, some self-restrictions of some countries in the form of a ban on loading Russian gas trucks in ports and requests from the authorities of a number of EU states to their companies to stop working with Russian suppliers in the future, - the specialist comments.
Belova stressed that today there are no formal bans on the supply of Russian LNG to Europe.
- Now "Arctic LNG-2" will become a litmus test for the future of the Russian LNG industry. The project, which should work in the coming months, was on the U.S. sanctions lists. The question is whether the relevant foreign companies will terminate LNG supply contracts with him or ask for exceptions to the sanctions, the expert said.
Trade continues
Alexander Kamkin, Senior Researcher at IMEMO RAS, in a conversation with Izvestia, in turn, noted that cooperation between Russia and the EU is going on, but in roundabout ways, bypassing some restrictions.
- For example, in the field of insurance of sea transportation or bank transactions. But both in terms of agricultural products and LNG supplies continue, and in the end in Ukraine the Russian gas pipe has not been blown up, and the gas goes to Europe. Supplies to Hungary, Serbia, Austria continue on the South Stream," said the political scientist.
The expert believes that it is impossible to talk about the complete isolation of Moscow, although he admits that Russia has created a lot of difficulties.
- Another important position is mineral fertilizers from the Russian Federation, Russian suppliers continue to supply to the European market. They, again, go roundabouts, but in the end, European politicians and business analysts recognize that LNG, oil that is exported to different countries, is ultimately of Russian origin or a mixture with Kazakhstan," the specialist stressed.
According to the expert, despite everything, these sanctions do not completely cancel world trade.
- They just make it difficult to profit from trading operations. Despite the loud statements of Borrell with von der Leyen and other spronouncers of the sanctions opinion, no one completely refuses trade relations with Russia," the specialist summed up.
