The EU is Dependent on Russia: The Role of Rusian LNG in Financing Putin's Aggression

Business with Russian liquefied natural gas in the EU is booming and constantly bringing money to Putin's coffers, even though there are huge tensions between the EU and Russia

by Sededin Dedovic
The EU is Dependent on Russia: The Role of Rusian LNG in Financing Putin's Aggression
© Pascal Parrot / Getty Images

Russian liquefied natural gas deals in the EU are booming and continuously contributing to Putin's war chest. This sector relies on a limited number of specialized tankers, but sanctions are still not on the horizon. Huge sums of money go into the state coffers of Russia precisely from EU citizens, and of course Putin uses that money to finance the war in Ukraine.

At the end of February, the ship "Christophe de Margery", loaded with LNG from Russia, docks in the Belgian port of Zebruge. This phenomenon is not uncommon. Journalists from the German public service ARD follow the movements of Russian tankers that regularly visit European ports.

Transport is carried out smoothly, regardless of the huge tensions between the EU and Russia since the beginning of the aggression against Ukraine. "Christophe de Margerie" regularly docks in Zeebrugge, along with 15 other Arc7 class tankers.

These icebreaker-tankers transport LNG from Russia's Yamal Peninsula to Europe, commissioned by Novatek, especially during the winter months. Although things heated up after French President Emmanuel Macron said NATO was considering sending troops to Ukraine, the last few weeks have seen a heavy schedule of tankers sailing to the EU.

One of the owners of these tankers is oligarch Gennady Timchenko, a member of the elite circle close to President Vladimir Putin. Although the European Union has already introduced sanctions against Timchenko, his tankers continue to dock at EU ports without interruption, each delivery bringing in a minimum of 30 million euros.

Considering the number of tankers that bring liquefied gas to the EU almost every day, the total value of all deliveries since the beginning of the Russian aggression against Ukraine is measured in tens of billions of Euros.

Although the 13th package of sanctions against Russia was recently adopted, gas deliveries are not yet covered by those measures. Even the German Federal Government does not demand sanctions for gas deliveries, justifying it by a "strained supply situation".

Officially, Germany no longer receives Russian gas, but there is a possibility that smaller quantities arrive via neighboring European countries. Europe and especially Germany have no choice, whether they admit it or not, more than half of German industry depends on Russian energy companies.

In addition to Germany, other countries such as Hungary have already concluded new contracts with Moscow on additional gas deliveries. In France, the company "Total" operates with LNG on the Russian Yamal Peninsula. Although gas imports via pipelines have been reduced, LNG trade continues to flourish, accounting for around 15% of total gas consumption in the EU, and Germany is certainly the biggest user of Russian gas.

German Chancellor Olaf Scholz and Manuela Schwesig, Minister President of Mecklenburg-Vorpommern during the official opening of © Pool / Getty Images

LNG is now almost as important to the Kremlin as revenues from gas deliveries.

An estimated twelve billion euros worth of LNG is transported to and through Europe annually, with Putin planning to double that business in the coming years. European LNG terminals, such as those in Montoire-de-Bretagne, Bilbao or Zebruge, serve not only as destinations for gas in the EU, but also as transit centers for onward transportation of Russian LNG around the world.

Without transshipment in EU ports, LNG trade for Russia would be significantly more complex and expensive.

The possibility of giving up Russian LNG

Experts believe that in the meantime, the EU could give up importing Russian LNG.

There is a good supply of LNG on the world market, and the drop in prices allows the EU to use the same infrastructure to import other sources of energy. The European Parliament is also calling for tougher sanctions and a complete halt to Russian LNG imports.

However, the EU plans to end business with Russian gas only in 2027. The turning point is needed earlier, according to some economic experts. Ulrike Malmendir, an economist, emphasizes that the EU should immediately agree to stop importing Russian gas, using its collective strength.

According to her, the European Union was founded precisely for this purpose. However, challenges are present. Many EU members have a significant share of Russian LNG imports, which could cause internal political tensions. In addition, the transition to other energy sources requires long-term plans and investments.

This cannot be done overnight, as we have seen after several packages of sanctions against Russia by the EU. However, increasing pressure from parliament, experts and environmental activists suggests that the EU may be on the verge of change.

With the global market offering alternative energy sources and with increasing awareness of the political and environmental consequences of importing Russian LNG, it is possible that significant changes will occur in the energy landscape of Europe in the coming years.

Experts say that this will worsen relations between the EU and Russia, as there is currently mutual interest, but these relations are currently the worst in the last few decades, and the question is how much further it can deteriorate without an open armed conflict.