Russian liquefied natural gas (LNG) supplies to Europe have been disrupted by uncertainty over whether ships can offload cargo in European ports due to sanctions imposed on Moscow, ship tracking data shows and commercial sources.
The disruption comes at a time when Europe is facing record natural gas prices due to a tight supply that has driven up energy bills and led to governments paying billions of dollars in consumer subsidies who struggle to stay warm.
Four tankers that loaded LNG at Russia’s Yamal gas terminal and initially said they were sailing to UK and French ports have changed their destination status to ‘For orders’, Refinitiv ship tracking data showed. Eicon. This means that ships are waiting for new orders from their owners.
The change in destination came after Britain said on Monday it was refusing entry into UK ports to vessels owned, operated, controlled, chartered, registered or flying the flag of Russia, as it was increasing pressure on Moscow about the invasion of Ukraine.
The British decision added to the widespread disruption of energy markets caused by punitive measures the West has taken against Moscow, with traders avoiding Russian fuel even though numerous restrictions, including a ban on British ports, exempt Russian oil and gas per se.
“The UK’s decision to refuse Russian-flagged, operated or chartered vessels could significantly tighten the market if this decision is followed by other countries,” said Kaushal Ramesh, principal gas and LNG analyst at Rystad Energy. .
The hijacking of Britain’s closest tanker, the Fedor Litke, helped propel British gas prices higher on Wednesday, Refinitiv analysts said.
Britain’s first-month gas price rose more than 40% on Wednesday to 410 pence per therm, but was still below the record high of 453 hit on December 21. The price of British gas rose 37% to 405 pence per therm.
EU CONSIDERS BAN
Russia has supplied 7.5% of UK LNG imports so far this year and accounted for 19% of its imports in 2021, Ramesh said.
European Union states are also considering banning Russian ships from entering ports in the bloc to tighten maritime restrictions after air traffic was halted, EU officials say, a move that would further hamper commercial shipments of Russia.
The European Parliament on Tuesday approved a non-binding resolution calling for broader sanctions against Russia as well as the closure of EU ports to Russian vessels and vessels coming from or bound for Russia, except for ” justified humanitarian reasons”.
Trade sources said the new destination status of the four LNG carriers reflected caution about what happens next with European ports.
The Dutch first-month gas contract, a European benchmark, ended up 42% at 174 euros per megawatt hour (MWh) after setting a new record high of 185 euros/MWh.
Canada said on Tuesday that it too would close its ports to Russian ships later this week.
The LNG carrier Fedor Litke changed course on Tuesday evening from its previous destination at Britain’s Isle of Grain gas import terminal.
This followed the hijacking of the NS Champion, a tanker operated by Russian shipping company Sovcomflot, which diverted from Britain on Monday and sailed to Denmark instead.
A spokesperson for National Grid, which operates Isle of Grain, said: ‘We fully support the Government’s action to order UK ports to block all Russian-linked vessels, and are in urgent discussions with the Government. and customers to ensure that this can be applied to LNG Terminals.
The other three vessels – the Boris Davydov, the Christophe de Margerie and the Boris Vilkitsky – were heading for the Isle of Grain and the French gas terminals of Montoir and Dunkirk before changing destination status, according to tracking data.
Yamal LNG’s majority shareholder, Novatek, did not respond to requests for comment on the changes. The Christophe de Margerie is operated by Yamal LNG.
Greece-based Dynagas, which operates the Fedor Litke, Boris Davydov and Boris Vilkitsky according to shipping records, did not respond to a request for comment.
The Montoir terminal was still waiting for Christophe de Margerie, said a spokesperson for the operator of the Elegny terminal, which belongs to Engie.
Another LNG vessel operated by Russian shipping company Sovcomflot, the La Pérouse, was also expected at the terminal although it did not have an arrival date, the spokesperson said.
Sovcomflot declined to comment this week.
“The market seems to realize that Russia is not only a major gas pipeline exporter, but also the world’s fourth-largest exporter of LNG,” Engie EnergyScan analysts said in a note.
“With companies active in the LNG sector like Shell, BP and now Exxon Mobil deciding to leave the country and withdraw from their partnerships with Russian companies, the sustainability of Russian LNG exports is in question,” they said. they wrote.
Source: Reuters (additional reporting by Forrest Crellin in Paris and Kate Abnett in Brussels; editing by Simon Webb and David Clarke)