Spain is taking advantage of its enormous park of regasification plants (those that receive and send gas in ships) to become a key player in the continental gas board. The Spanish gas system, which concentrates a third of the regasification capacity of all of Europe, is becoming a great continental hub for arrival and re-export of liquefied natural gas (LNG), which is transported frozen by ship, reaching historical highs.
Europe has proposed progressively reduce its dependence on Russian gas and Russia has cut off gas pipeline sales to the continent. But for now Russian gas imports are not formally affected by economic sanctions imposed by the EU to cut off the Kremlin’s financing channels to finance the military invasion of Ukraine.
With gas purchases outside of raw materials included in the trade blockade, Spain is also becoming the great gateway for Russian gas to Europe. The Spanish market is confirmed as the largest avenue of gas import by ship coming from Russia from across the European Union, with European energy companies taking advantage of the country’s extensive network of regasification plants and aiming to then resell some of that gas to other destinations.
The result is that the weight of the Russian gas arrivals to Spain have continued to grow since the start of the war and this year alone they have increased by more than 50%, according to data from Enagás, the manager of the Spanish gas system, and the Corporation for Strategic Reserves of Petroleum Products (Cores). An increase that confirms Spain as the largest European importer, ahead of France and Belgium.
The countries of the European Union paid 5,510 million euros for Russian gas imports between January and July, and almost a third of that amount was concentrated in purchases destined for installations in the Spanish gas market, according to estimates by the Institute of Energy Economics and Financial Analysis (IEEFA), a specialized think tank based in the United States.
Energy companies specifically paid 1,650 million euros in the first seven of the year for purchases of Russian gas that ended up in Spain (a quarter of the total of the 6.3 billion that all Spanish imports of liquefied natural gas cost). The amount paid by Spain to Russia places the country at the head of the buyers, ahead of the 1,320 million that imports from France cost, the 1,300 million from Belgium or the 910 million from the Netherlands, according to the latest report published by IEEFA .
The Government’s request
The Spanish Government has been repeatedly publicly expressing its preference that the energy companies reduce their purchases of Russian gasbut assuming that companies can continue buying Russian gas given that the European Union has not adopted a coordinated decision to veto its import.
The Executive has even gone so far as to ask directly by letter to the large Spanish gas operators to stop buying Russian gas and do not sign new supply contracts, joining the request made by the European Commissioner for Energy, Kadri Simson, that no new gas supply contracts be signed with Russian companies once the current ones end.
“It is necessary to unite in this request from the Commission and appeal to Spanish companies in the sector to intensify the diversification of liquefied natural gas supply contracts and dispense with those from Russia,” the vice president and minister for the Ecological Transition, Teresa Ribera, in a letter sent to the large energy operators Spanish people.
No EU veto
The European Union has launched several packages of sanctions against Russia to economically suffocate Vladimir Putin’s government and cut off their means of financing the war in Ukraine. Among the multiple punitive measures, the blocking of Russian gas purchases has not been included. And after more than a year and a half of war, Spain is becoming the largest recipient of Russian gas by ship and then re-exports it to other countries.
From the energy sector, different circumstances are pointed out that explain the sustained increase in purchases from Russia. Imports respond in many cases to long-term contracts signed long before the invasion and that they cannot be broken without exposing themselves to million-dollar sanctions, the companies justify, and a part of the increase in arrivals corresponds to diversions of LNG ships that were destined for other European countries that had to look for other destinations due to problems in the European plants, singularly. during last summer.
Naturgy, the largest Spanish gas operator, continues to receive gas from Russia as a result of a long-term contract with Yamal, a liquefaction plant controlled by a consortium involving the private Russian group Novatek, the French Totalenergies and Chinese companies. The contract contemplates the supply of just over 3 bcm (billions of cubic meters) of gas per year until 2042.