Russian LNG exports to Europe broke a historical record in November

Russian LNG exports to Europe in November were the highest ever at 1.75 million tonnes, while supplies to China fell sharply. In general, November LNG exports from the Russian Federation are at a high level of 2.914 million tons, only slightly inferior to the annual maximum. In January-November, the Russian Federation exported 29.12 million tons of LNG, which is 2.5% less than a year earlier. Analysts explain the reorientation of LNG supplies from Russia by congestion on the Panama Canal, which led to the fact that exporters with a shorter transport distance, including the Russian Federation, preferred the European market to the Asian market.

Russian LNG exports to Europe in November broke a historical record, reaching 1.75 million tons, according to Kpler data. The previous record – 1.737 million tons – was set in December 2022. Overall, in November, LNG shipments from the Russian Federation increased by 9.3% year-on-year, amounting to 2.914 million tons.

The largest volumes in November went to France, where six batches were shipped from NOVATEK’s Yamal LNG plant, and to Belgium, where ten batches arrived from NOVATEK’s medium-tonnage Cryogas-Vysotsk plant. However, supplies to China fell sharply in November, to 0.1 million tons, while last month 0.8 million tons were supplied to the country.

In November, Japan and South Korea continued to fully select their nominations for long-term contracts with Gazprom’s Sakhalin-2: supplies from the plant to Japan increased by 22% year-on-year, to 0.64 million tons, and to South Korea – by 50% to 0.28 million tons.

November gas futures in Europe were comparable in price or even traded higher than spot LNG supplies to Asia on some days. This fact, taking into account the significantly lower costs of transportation to Europe from Yamal, makes the European market attractive, notes independent expert Alexander Sobko. He adds that the Chinese CNPC, the buyer of Yamal LNG, has previously shown itself as a trader, redirecting part of the LNG from its portfolio to more profitable markets and compensating these volumes for the Chinese market, if necessary, from other sources.

Victor Katona from Kpler points to strong growth in LNG imports to China overall in November, so the redirection of Russian supplies, according to his estimates, is not caused by weak Chinese demand, but by the greater attractiveness of the European market.

In January-November, shipments from the Russian Federation amounted to 29.12 million tons, which is 2.5% less than a year earlier. This year, in July and August, the main LNG plants of the Russian Federation, Yamal LNG and Sakhalin-2, were stopped for technological repairs, which is why export volumes began to recover only in October. Over 11 months, 14.78 million tons of LNG were supplied to Asian countries from the Russian Federation, and 18.8 million tons to Europe.

Europe is becoming increasingly dependent on LNG imports as it is forced to replace pipeline gas from Gazprom, once the region’s main supplier. Russian LNG was not subject to sanctions after the outbreak of hostilities in Ukraine, so supplies to Europe continued to increase amid high prices. However, US sanctions were imposed on NOVATEK’s new Arctic LNG 2 project; their impact on LNG supplies to Europe next year is still unclear.

Victor Katona attributes the increase in supplies to the EU market to congestion in the Panama Canal area, which has greatly modified the main LNG flows: exporters now prefer short logistics chains. The cost of chartering LNG tankers in the Atlantic Basin has increased to $160 thousand per day, while the average in 2019–2022 was about $90 thousand per day. “Thus, European buyers have maximized purchases from relatively nearby countries – supplies from the United States are growing every month, Algeria is still in business, Russia has reached an all-time high, while Qatar and other distant countries are very low,” he explains .

LNG export volumes from Russia in November decreased slightly compared to October and actually repeated the very strong results of the previous month of 2.98 million tons, notes Alexander Sobko. In annualized terms, that is, in fact, based on the current operating capacity of liquefaction plants, he clarified, November exports amounted to almost 35 million tons per year, “although it is clear that the actual indicators at the end of the year will be 2.5–3 million tons lower due to summer repairs.”

Tatiana Dyatel