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Spain, France won’t ban Russia LNG despite EU “gesturing”

(Montel) Two of the three EU countries most reliant on Russian LNG – Spain and France – are unlikely to ban Russian imports despite Brussels paving the way for national restrictions, with one trader telling Montel the move was simply a “gesture”.

Spain’s energy minister Teresa Ribera said in a press conference on Thursday there was no legal basis to impose sanctions on Russian LNG deliveries as the EU’s provisional deal had not yet become binding.

She was referring to last month when EU lawmakers agreed on a provisional deal to give EU countries the legal power to block Russian gas imports.

However, while Ribera said fewer Russian imports “would be desirable” and advised companies to avoid signing new supply deals with Moscow, she did not give any indication that a ban might be in sight.

France, meanwhile, was “assessing whether the conditions for implementing [a ban on Russian LNG imports] could be met, which did not seem to be the case at this stage”, a French energy transition ministry spokeswoman told Montel, highlighting the need to protect Europe’s security of supply. 

An embargo would only impact the booking of new regasification capacities in terminals, while “the majority” of these slots were currently reserved under long-term contracts, she added. 

European countries – excluding Turkey – imported just over 20bcm of LNG from Russia last year, down by a marginal 1% versus 2022, according to preliminary data from ship-tracking firm Kpler. 

Spain imports jump
Of the total, Spain was the largest importer, with deliveries jumping by more than a third to 6.7bcm, while Belgium also hiked imports by 41% to 6.6bcm. In France, the third-largest importer, shipments declined 35% from the previous year’s total to 4.7bcm.

European countries might consider “more restrictive” measures against Russian LNG imports amid improved market fundamentals, relatively full storage facilities and normal to mild temperatures, Anne-Sophie Corbeau, a research scholar at Columbia University’s global energy policy centre, told Montel. 

“The more favourable the fundamentals are, the more the EU are inclined to get rid of Russian LNG,” she said. 

Price increases?
However, one Spanish trader told Montel the EU simply wanted to make “gestures that indicate more drastic” action in the future.

If Russian LNG was sanctioned right now, there would be “drastic price increases”, he added. 

Another agreed, noting that currently gas prices had decreased compared to last year, partly because the supply of Russian LNG was so “abundant”.

The benchmark front-month TTF gas price was seen last at around EUR 31/MWh, which was down considerably from around EUR 65/MWh at the same time last year, Ice Endex data showed.

Bearish mood
National embargoes on Russian LNG were “possible given the current European mood, yet it would be like shooting yourself in the foot”, said a trader at a large French industrial firm, referring to the risk of gas prices spiking at least momentarily.

Participants were now “trying to cancel the gas impact when trading on the market by trading spreads because it has become uncontrollable, with potentially new measures coming out of nowhere”, he added.

The UK, Latvia, Lithuania and Estonia have already unilaterally imposed a ban on all Russian LNG imports amid attempts by European countries to cut their reliance on energy imports from Moscow due to the war in Ukraine.

The Belgian energy ministry has not yet responded to Montel’s request for comment.

Additional reporting by Rodrigo de Miguel.