European Union Continues Dependency on Russian LNG

Executive Summary:

•  Russian LNG exports and production increased significantly in 2024. The export of hydrocarbons, including LNG, remains one key means by which Russia finances its war against Ukraine.
•  Other large LNG producers, such as the United States and Qatar, prefer to sell their energy in the more lucrative markets of the India-Pacific region, where buyers are ready to pay more for LNG.
• To get rid of the dangerous dependency on Russia, the European Union could look for alternative sources of LNG. Until then, Russia’s invasion of Ukraine will continue to be funded through Russian LNG exports.

Russia increased its export and production of liquified natural gas (LNG) in 2024 despite substantial international sanctions. On December 26, 2024, Deputy Prime Minister of Russia Alexander Novak stated that in 2024, Russia exported 33 million tons (MT) of LNG, exceeding the amount exported in 2023 (Portnews.ru, December 26, 2024). In addition to growing exports, Russia also increased production of LNG by 5.8 percent (equivalent to 2.9 MT) compared with the previous year, which, according to Russian officials, broke a record in Russia’s history of production of LNG (Interfax.ru, October 23, 2024). The export of hydrocarbons, including LNG, remains one of the key means allowing Russia to finance its war against Ukraine (see EDM, January 27). Severing this stream of income would deal a decisive blow to Russia’s ability to sponsor its war and use its raw materials as a means of intimidation.

In 2024, Russia’s growing LNG exports were enabled by three main actors. South Korea increased imports of Russian LNG by 29 percent. In total, in 2024, Russia exported 2.1 MT of LNG, which primarily came from Sakhalin Energy Investment Company Ltd. (jointly operated by Gazprom with Mitsui and Mitsubishi) and Yamal LNG (Novatek, TotalEnergies, CNPC, and China’s Silk Road Fund (SRF)) (Lenta.ru, January 15). Notably, LNG was not the only Russian import that significantly increased following Russia’s invasion of Ukraine. Aluminum imports rose dramatically, making Russia South Korea’s number one supplier of the element, overtaking Australia and India (Macdonaldlaurier.ca, October 21, 2024).

The People’s Republic of China (PRC) imports of Russian LNG reached 8.3 MT in 2024, 3.3 percent more than in 2023. In monetary value, however, Russia’s exports decreased by 3.5 percent ($4.99 billion). In 2024, Russia became the PRC’s third largest source of LNG—after Australia (26.19 MT) and Qatar (18.34 MT), with Malaysia (7.69 MT) and the United States (4.15 MT) trailing Russia (Vedomosti.ru, January 20).

The European Union remained a key importer of Russian LNG in 2024 despite reducing economic and trade ties in many sectors. Regarding natural gas, including LNG, Russia became the European Union’s second-largest supplier, ceding first place to Norway. Russia’s exports of LNG to the European Union grew by 21 percent year-over-year (YOY), reaching 21.5 MT, against 17.8 MT in 2023 (TASS, January 2). The United States exported 18 percent (14 MT) less of LNG in 2024. In contrast, Qatar also decreased sales to the European Union by 30 percent. Additionally, the European Union decreased imports of LNG by 18 percent (30 MT). Both suppliers chose to switch to more lucrative markets of the India-Pacific region, where buyers are ready to pay more for LNG than in the European Union (TASS, January 21).

Notably, while exports of other suppliers have been falling, Russia’s export share to the European Union continues to boom in early 2025. For the first two weeks of the new year, EU countries imported 0.837 MT of LNG, setting a new YOY record (Profinance.ru, January 17). Russian experts believe that despite promises to sever energy ties with Russia, the European Union is unlikely to do so. In effect, it is believed that under the influence of external factors—including Norway departing from the hydrocarbons-exporting business model—Russia might increase its share in the European Union’s energy mix by increasing supplies of LNG (Izvestiya, January 20).

Oleh Savytskyi, the Campaigns Manager at Razom We Stand, a Ukrainian grassroots movement calling for a total and permanent embargo on Russian fossil fuels and an immediate end to all investment into Russian oil and gas companies, highlighted some key ways Russia continues to export LNG amid sanctions. Savytskyi has pointed out that Russia’s LNG exports are enabled by, among others, the fact that Russia’s key LNG producer, Novatek, operates via Switzerland- and Singapore-based subsidiaries that secure its ability to operate internationally. Thus, in 2024, Russia gained more profit by exporting LNG than pipeline gas sales. Due to no systemic and coordinated international sanctions being introduced against Novatek and its subsidiaries, the company managed to not only export LNG but also import critical equipment powering its key projects, such as the Arctic LNG-2 project. Given that Russia-originating LNG is less expensive than U.S.-produced, the price difference is not the only factor in Russia’s growing LNG export to the European Union. Russia managed to increase exports of LNG to the European Union, putting the bloc in even greater dependency on Russian hydrocarbons. Savytskyi also expressed concern that even though in March 2025, the European Union is bound to introduce new restrictions against Russian LNG, Russia might still be able to evade these sanctions and continue exporting LNG to European countries (Eurointegration.com.ua, January 9).

In 2025, gas prices in the Asian market are expected to remain higher than in Europe, primarily stipulated by the consumption of resources from the growing economies of the India-Pacific region. The United States and Qatar would likely be more interested in directing much of their supplies to these countries, while Russia supplies abundant and inexpensive LNG to European customers, which, as many experts are wary, will not be fully sanctioned by the European Union (Eurointegration.com.ua, January 24). Debates about the use of Russian hydrocarbons, LNG in particular, among EU member states, however, have intensified. Currently, a group of ten countries—Czechia, Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, Poland, Romania, and Sweden—have stated that the European Union should take a much tougher position on the import of Russian energy (Pap.pl, December 20, 2024). To get rid of the dangerous dependency on Russia, the European Union could look for alternative sources of LNG, the two most obvious options being Canada—where political changes could result in a changing mindset regarding exports of LNG and natural resources—and the United States, which already has a robust LNG industry. In her recent speech, President of the European Commission Ursula von der Leyen clearly stated that the European Union must replace Russian- for U.S.-produced LNG. (Profinance.ru, January 17). Europe’s dependency on Russian energy is critical for Russia to keep funding its war in Ukraine. Until Europe can wean itself off Russian LNG, Russia will continue to be able to fund its invasion of Ukraine.