Half of Britain’s imports of liquefied natural gas so far this year have come from Russia, illustrating how UK households have started sending more money to Moscow after Vladimir Putin made boosting exports of the super-cooled fuel a priority.
Russia has accounted for three of a total of six LNG shipments that have arrived since early January in the UK, whose tensions with Moscow have risen to the highest level since the Cold War following an alleged Russian nerve gas attack in Salisbury.
All three Russian shipments have come from the Yamal LNG project in Siberia that was targeted by US sanctions before its start-up late last year, though shipments themselves are not restricted.
Yamal’s opening, which was hailed by Mr Putin as boon for the Russian economy and evidence of its ability to withstand sanctions, has unleashed a wave of Russian LNG, with cargoes destined for the UK and on the US east coast.
The UK cargoes have a shone spotlight on the UK’s increasingly import-dependent energy strategy, with declining North Sea output and limited storage in the country.
While LNG imports make up only a small portion of UK gas demand, estimated at 3-5 per cent so far in 2018, the total could grow following the shutdown of the country’s main Rough storage site, which has left the country’s gas supplies more vulnerable to price spikes if pipeline outages or particularly cold weather coincide.
“We rely fairly heavy on imports of gas to get through the winter,” said Trevor Sikorski, chief gas analyst at Energy Aspects in London.
“Having closed down our largest storage facility we face a lot more volatility around prices and potentially higher prices.”
Novatek, the company that developed Yamal as part of a consortium with France’s Total and China, won praise from Mr Putin who oversaw the launch of the first cargo from the Siberian peninsula at the end of last year. Previously Russia had no easy means of getting LNG into Europe, with its only facility in the far east of the country.
The Department for Business, Energy and Industrial Strategy said on Tuesday the UK was “in no way reliant” on Russian gas and maintained that “less than 1 per cent of our gas comes from Russia”.
But the arrival of three Russian tankers of LNG since January suggests supplies from Yamal have gained a significant foothold in the UK.
Two of the shipments have been brought to the UK by Malaysia’s Petronas, which has a trading arm based in London and has a stake in the Dragon LNG terminal in South Wales. The other was brought in by Royal Dutch Shell earlier this month after a vicious cold snap raised UK gas prices.
Two cargoes from Yamal have also gone to Boston in the US, raising questions about local opposition to gas pipeline development that has kept the city largely cut off from the US shale gas boom.
Novatek, a private company whose directors include Gennady Timchenko — a close ally of Mr Putin — has said it is simply part of a global market for LNG.
“It’s kind of a shame that we’ve been vilified in the press for helping the city of Boston with their cold shortage, and then today we’ve been again vilified by the city of London for delivering LNG to London at a time when they needed gas,” Novatek chief financial officer Mark Gyetvay said at a conference in Houston last week.
“Actually you should be blaming not me, you should be blaming this fellow here,” he added, gesticulating at a fellow panel member, Anuar Taib of Malaysia’s Petronas. “Because we sold it to them.”
On Tuesday the latest Russian tanker, the icebreaker-class Eduard Toll, was preparing to unload its cargo at the Isle of Grain terminal on the Kent coast, where it is expected it will be regasified and pumped into the National Grid. Additional reporting by Gregory Meyer
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