Spain embraces US oil and gas in the new commercial puzzle

Spain is finding USA to a crucial energy supplier in the midst of a commercial upheaval following the energy crisis and by the geopolitical scenario generated by Russian invasion of Ukraine. Last year, the American giant became the largest supplier of Petroleum for the first time in history and has confirmed itself as the main supplier of liquefied natural gas (LNG)the one that arrives by ship, for the Spanish energy system (only Algeria surpasses the US in gas sales to Spain but using the gas pipeline that crosses the Mediterranean).

USA has managed to boost its oil and gas production thanks to the controversial technique of ‘fracking’, which involves fracturing rocks by injecting high-pressure water to extract hydrocarbons, with the consequent environmental impact of the work. In Europe it is a widely banned practice. Spain prohibited the granting of new prospective authorizations with the entry into force of the Climate Change Law, in 2021, but imports hydrocarbons obtained through ‘fracking’ in large quantities thousands of kilometers away.

After two years in which all of Europe has formed a new business puzzle with a renewed list of energy suppliers To get around Russia, the United States ousted Nigeria last year as the main oil supplier to the Spanish market, with more than 8.7 million tons of crude oil, 31% more than the previous year and more than double that of 2021. at the dawn of the energy crisis, according to the records of the Strategic Reserves Corporation (Cores).

Spanish companies have clung not only to the United States, but also to other supplier countries on the other side of the Atlantic to guarantee crude oil imports: total purchases from the North American market grew by 21% last year, imports from from Central and South America rose 24.7%, while crude oil arrivals from Europe and Central Asia (-24.3%), the Middle East (-30%) and Africa (-10%) fell.

Gas by boat

The United States has also played a key role in the supply of natural gas to Spain during the energy crisis. In 2022 it was the largest supplier to the Spanish economy in the midst of an energy earthquake, even displacing Algeria after half a century in the lead. In 2023, with the gas market relatively normalized, Algeria has regained its status as the largest supplier thanks to the gas pipeline that connects both countries (with 29.3% of all imported gas).

The United States has remained the largest seller of liquefied natural gas, which arrives by ship in liquid form and is then regasified in plants located in Spanish ports. Gas from the US accounted for 21% of all imports, despite purchases having been reduced by 35%, to 82,858 gigawatt hours (GWh). Purchases from the US were still 21% higher last year than in all of 2021.

Spain has managed to establish itself as a large global gas resale center in the midst of the historic shock of the sector due to the energy crisis and the geopolitical earthquake unleashed by Russia’s invasion of Ukraine. All of Europe began to look for new gas supply countries to reduce its dependence on Russian gas and the large Spanish gas infrastructures have become a key element in guaranteeing continental supply, catapulting re-exports to historical highs.

The Gas re-exports from Spain increased another 10% last year, up to a new record of 75,500 gigawatt hours (GWh) equivalent, according to Cores records. An increase that marks a new record for gas resale and that comes after Spain managed to catapult the resale of gas to other countries in 2022, almost doubling re-export activity, with a growth of 91%, to exceed 68,200 GWh .

Spain is making the most of its extensive network of regasification plants – which concentrate 33% of the regasification capacity of the entire European Union and 44% of the continent’s LNG storage – and its gas pipeline connections with Europe to become a great hub for the arrival and re-export of gas. Spain It was last year in the non-producing country that sells the most gas in the world.

Russia: more gas, zero oil

The European Union set up a system of economic and trade sanctions against Russia to try to hit its income and hinder the financing of the Kremlin’s military invasion of Ukraine. Among the measures imposed by the Twenty-seven include the veto on imports of Petroleum coming from Russia, but the sale of natural gas has remained. The result is that Spain has not received any Russian oil since mid-2022 (at least formally, because it is assumed that Russia use shortcuts to get it) but Gas purchases from Russia have continued to skyrocket.

Spanish companies began to drastically reduce their exposure to Russian oil with the start of the war and have now accumulated 22 consecutive months in which they have completely cut off supplies from Russia. After imports shot up by 162% during 2021, reaching 4.6% of the total national supply, in the following months cuts in imports were recorded and since May 2022, the arrival of Russian crude oil to the Spanish market has been zero .

However, Spain continues to increase purchases of gas from Russia despite the war. Spanish imports of Russian gas grew by 30% last year, reaching almost 72,700 GWh equivalent, and Russia consolidated its position as the country’s third largest gas supplier with more than 18% of total purchases.

The Spanish Government has been pressuring – without success – the energy companies responsible for these imports of Russian gas to reduce purchases and not sign new supply contracts. But the Executive is resigned to not having legal tools to prevent it and assumes that companies will be able to continue purchasing Russian gas in the quantities they freely determine, because the European Union has not vetoed its import as part of the economic sanctions against the Kremlin for the invasion. from Ukraine.

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