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This contribution comes from the Boon & Knopers Substack
Despite Russian sanctions, the European Union imported the largest volume of Russian natural gas via pipelines in July since the end of winter last year, according to an analysis by RIA Novosti based on Eurostat data. In the summer, EU countries doubled their purchases of Russian pipeline gas, with a total value of €665.4 million, the highest amount since February last year.
Italy was the largest buyer, importing €214 million worth of gas, a fivefold increase compared to July last year. Hungary and Slovakia also increased their imports by more than 20 percent to €164.2 million and €115.8 million respectively. In contrast, Greece, Bulgaria and the Czech Republic reduced imports of Russian pipeline gas, while Austria traditionally does not release data.
In total, the EU bought €3.95 billion worth of Russian pipeline gas in the first seven months of this year, which is 24 percent less than the same period last year. But the purchase of natural gas from other suppliers fell even more sharply at 45 percent, increasing the share of Russia in total European gas imports to almost 19 percent, compared to 14 percent last year. In addition, the EU imported a record amount of €565.7 million worth of Russian liquefied natural gas in July.
These figures show that European countries are still dependent on Russian gas and that it is proving difficult to find alternatives. While the import of coal and oil from Russia was phased out soon after the war, there is still no embargo on natural gas. This is because several European countries still have agreements with Gazprom and sometimes have no other options for importing gas due to their geographical location. And these are mainly countries that are closer to Russia and do not have access to the open sea, so they have to rely on gas pipelines that have been there for decades.
Dependence on Russian gas, based on the situation before the war in Ukraine
For example, Austria has been importing natural gas from Russia for more than 50 years and its dependence has increased further since the start of the war in Ukraine, from 80 to 98 percent. This is due to a long-term contract between Gazprom and Austria's OMV, which will allow the country to buy natural gas at a very favourable price until 2040 in volumes of up to 60 TWh per year, enough to fully meet domestic demand.
It is worth mentioning that Austria relationships NATO when it comes to certain peacekeeping missions, but that it is not a member of this transatlantic military alliance. In this sense, Austria takes a more neutral position on Russia, which is also reflected in the fact that the country makes virtually no effort to reduce its dependence on Russian gas.
It is also striking that Italy is importing more Russian gas again. To do so, it can use several routes, either via Austria or via a pipeline that runs through the Adriatic Sea and Greece to Turkey. As we have seen in a previous Weekly Italy is already fully connected to the Southern Gas Corridor, where natural gas from Russia and Azerbaijan finds its way to Europe. This makes Italy less vulnerable when it comes to energy supplies.
Germany and Italy were the largest buyers of Russian gas in 2022 (Source: Europe Beyond Coal/CREA)
The fact that these two countries, as well as Slovakia and Hungary, import more Russian gas could mean several things. It is conceivable that these countries will want to accelerate the replenishment of their gas reserves in view of the transit agreement between Ukraine and Russia due at the end of this year. Expires. A second possibility is that they are anticipating a weakening of the European sanctions policy. A third option is that they want to reduce energy bills and import more Russian gas from a pragmatic point of view, because it is much cheaper than liquefied gas from, for example, the US or Qatar.
The increase in gas imports from Russia shows that Europe is highly dependent on energy, which prevents it from pursuing an independent foreign policy and ultimately allows national interests to continue to prevail. As the President of Azerbaijan, Ilham Aliyev, recently put it, articulated at a meeting in Italy: "National security cannot be separated from energy security."
At the same time, it shows that Russia is still willing to supply natural gas to Europe, as we recently highlighted in the Podcast at Holland Gold. This is diametrically opposed to claims that Russia has turned off the gas tap or is planning to do so.
How dependent Are we off oil and gas from Russia? (March 18, 2022)
Turkey is node for natural gas and seeks rapprochement with BRICS (4 September 2024)
Turkey is becoming important as a South Hub for Russian gas (September 6, 2024)
Austria wants to Trade relationship strengthen with Russia (8 June 2018)
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On behalf of Holland Gold, Paul Buitink interviews various economists and experts in the macroeconomic field. The aim of the podcast is to provide the viewer with a better picture and guidance in an increasingly rapidly changing macroeconomic and monetary landscape. Click here to subscribe.
