Daily Energy Report
Spain’s gas imports from Russia, winter is coming – LNG is the answer, Europe retreat on climate goals, Namibia’s oil jackpot, Net Zero target misses, Hydrogen subsidies, coal keeps burning, and more.
Chart of the Day: Spain is a gas gate for the EU, but also the backdoor for Russian LNG.
Since 2019, LNG supplies for the Spanish gas system have exceeded natural gas shipments via pipelines. Last year, LNG supplies accounted for 71%, while natural gas shipments accounted for 29%.
Figure (1) above shows sources of Spanish natural gas imports. Algeria used to be Spain’s top gas supplier for several years before flows via the GME pipeline halted. This gave way for the US to become for the first time the main supplier for the Spanish gas system, accounting for 29% of supplies in 2022, followed by Algeria (24%), and Nigeria (13.8%).
EOA’s Main Takeaway
Prior to Moscow’s invasion of Ukraine, Spain was not an importer of Russian gas. However, this later changed as Spain increased its imports from Russian energy giant Gazprom in the form of LNG despite EU attempts to shift away from Russian supplies. Although Spain’s Energy Minister, Teresa Ribera, requested that local companies refrain from signing new LNG purchases with Russia, flows have continued into the Spanish gas system, accounting for 27.6% of total gas imports last July, up from 14.5% for the same month in 2022.
During the first eight months of this year, Russian LNG supplies to Spain soared 62%, reaching 5 bcm up from 3.1 bcm for the same period last year (Figure 5). Spain’s growing appetite for Russian LNG pushed up its share to 19.7% of total imports until the end of August this year, from 10.9% in 2022. The EOA previously estimated that Spain, as well as other EU member states, will find it difficult to halt Russian gas supplies. Stopping imports of Russian gas under current market conditions would put additional pressure on Europe to secure its gas needs.
Spain enjoys a secure gas supply network thanks to its diversified supply routes, seven operating LNG terminals, and robust storage facilities, allowing it to become a gas hub for Europe in the future as the continent curbs its dependence on Russian gas. For now, however, Spain is acting as a back door for Russian LNG flows into Europe.