Little known but very concerning is the fact that in 2022 Russian liquified natural gas production grew by 8% and Russia, contrary to the sanctions, has expanded shipments of LNG to Europe and is building another LNG terminal in the Arctic. And this in part is facilitated by western firms. Russia is still exporting 10 TWh to 15 TWh per month of LNG to the EU. This is not subject to sanctions but could be cut unilaterally by Russia any time.
Since the start of Russia’s brutal invasion in Ukraine, the gas industry has announced that 195 billion cubic meters (bcm) per year in LNG import terminal capacity in Europe is planned to come online by 2026, at a minimum cost of seven billion euros, according to Global Energy Monitor. Before the onset of full-scale war in Ukraine, by contrast, the EU imported 155 bcm of gas in 2021 from Russia, including LNG shipments.
Most scandalous is the fact that western companies, like Baker Hughes, Siemens, Technip and GTT were supporting the major expansion of the Russian gas industry by participating in the Arctic LNG-2 project. Most of them have withdrawn, but only after Putin unleashed his brutal invasion in Ukraine. This should not be allowed in the first place. Supporting expansion of Russia’s gas infrastructure is not only about feeding the war in Ukraine. Western contribution to construction of Arctic LNG-2 terminal could be one of the final straws to break the camel's back regarding climate disruption; it can put the 1.5 degree Paris Agreement climate target off reach.
Arctic LNG-2 aims to transport and sell more Russian gas to international markets and could double the LNG exports capacity of Novatek, Russia’s biggest private gas producer. Before Russia attacked Ukraine, Arctic LNG-2 was set to be launched this year and reach full production capacity of almost 20 million tonnes of LNG per year.
US-based Baker Hughes was providing equipment and components for the Arctic LNG-2 project for many months after the invasion in Ukraine began. Furthermore, in January 2023 it was revealed that the same enterprise of Baker Hughes in Montrose (Scotland) that was sending technology to Russia for Arctic LNG-2 throughout 2022, has received in total £4.9m ($5.9m USD) of UK taxpayers’ money in grants.
Another important western technology provider involved in the Arctic LNG-2 project is the French company Gaztransport & Technigaz (GTT), the world’s key engineering firm that provides technology and systems used in LNG tankers. Originally GTT was set to provide services to Russia’s Zvezda shipyard for construction of 15 ice-class LNG tankers for Novatek.
In January 2023 GTT publicly announced its exit from Russia, following Total Energies, but in practice this exit is not happening. It is reported that GTT is still involved in construction of two specialized Arc7 LNG carriers for Russia. GTT is also continuing to work on construction of two critically important floating storage units (FSU) that Novatek ordered in 2020.
Involvement of U.S. and EU based firms in such a major fossil fuel infrastructure expansion project in Russia should have been banned by governments, not subsidized. If finished and launched with equipment and services provided by Baker Hughes, Siemens, Technip and GTT, the Arctic LNG-2 can set a fuse to Russian carbon bombs - unlocking extraction at new gas fields and further gas exploration in the Arctic, which is a death threat to climate and environment.
The EU is already the largest LNG importer in the world. The EU's overall LNG import capacity is around 157 bcm in regasified form per year – enough to meet around 40% of the continent's total gas demand.
Expanding gas infrastructure makes no sense at the time when we need to move rapidly away from fossil fuels to stop massively expensive climate destruction, which costs trillions. And it is nothing else but a frivolous waste of public money to invest in gas, when over the long term gas demand is falling as cheaper renewable energy production booms. There is no space for major expansion of LNG in Europe.
The push for expansion of LNG infrastructure is not about energy security in Europe – it’s about corporate greed, war profiteering and the obscene impunity of the fossil fuel industry. The same gas lobbyists that now promote new LNG projects in the fake name of energy security, were receiving millions from Russia’s Gazprom and served its interests for many years.
With excess windfall profits stemming from market volatility worsened by Putin’s brutal invasion in Ukraine, the gas industry must be subject to taxation and regulation, not satisfaction of new whims. There clearly should be no place for expansion of the gas infrastructure in Europe and definitely not in Russia.
EU climate targets can only be met with a reduction in gas demand of at least 35 percent compared with 2019 levels by 2030. Pulling the plug for Russia’s LNG expansion plans is the first obvious step to start. Without such action there’s no credibility to the EU's aspirations for peace, climate protection and energy security.