Belgium's Fluxys to continue Russian Yamal LNG transshipment services

Belgian gas infrastructure operator Fluxys is to continue offering LNG transshipments services at its Zeebrugge terminal for cargoes from the Novatek-operated Yamal LNG facility in northern Russia, a Fluxys spokesperson said April 7.

Fluxys in 2015 signed a 20-year deal with Yamal Trade -- a subsidiary of Yamal LNG -- for the transshipment of up to 8 million mt/year of Yamal LNG and carried out the first loading under the contract in late 2019.

The arrangement allows for Russia's specialized ice-breaker LNG carriers to transfer Yamal LNG volumes at Zeebrugge onto conventional LNG vessels to allow regular onward shipments to Asia-Pacific and Middle Eastern markets.

"While currently no European sanctions have been imposed on the receipt of Russian gas, Fluxys -- as a facilitator of an essential service -- is obliged to respect contractual agreements with all customers, including Russian customers," the Fluxys spokesperson told S&P Global Commodity Insights.

"It goes without saying that as soon as sanctions are implemented regarding the LNG from Russian LNG carriers, Fluxys would comply and cooperate with the governments concerned," the spokesperson said.

"The decision to close our grid to Russian ships is indeed up to the government authorities. This is a major decision, which may have an impact on Europe's supply, as the European market has no immediate alternatives to significantly reduce its dependence on Russian gas."

A total of 181 LNG vessels from all sources called at Zeebrugge in 2021, the highest ever number, Fluxys said at the end of March.

According to analysts at S&P Global Commodity Insights, around 5.3 Bcm of LNG supply from Yamal LNG was transshipped or reloaded to non-European markets from European terminals in 2021.

Of that, an estimated 4.8 Bcm of that was transshipped or reloaded at Zeebrugge.

Gas sanctions

There are growing calls for the EU to consider sanctions against Russian gas imports, including LNG, in response to Russia's invasion of Ukraine on Feb. 24.

European Council President Charles Michel said April 6 that the EU would need to take action on Russian gas imports "sooner or later" to maintain pressure on the Kremlin.

While the European Commission has signaled its intent for a sharp reduction in EU demand for Russian gas -- by as much as two-thirds by the end of the year -- contracted European buyers, mostly privately owned companies, have pledged to continue buying.

The EC proposed on April 5 a ban on Russian shipping from EU ports, but said certain exemptions covering essentials such as food, humanitarian aid and energy would apply.

With European gas prices still at sustained highs, Russian gas suppliers such as state-controlled Gazprom and Novatek are bringing in significant amounts of money.

The TTF front-month contract reached a record high of Eur212.15/MWh on March 8, according to Platts price assessments by S&P Global.

The contract averaged Eur129/MWh in March, an increase of 640% over the average in March 2021 of just Eur17.50/MWh.

The EU's foreign affairs chief Josep Borrell said April 6 that since the start of the war, the EU had paid Eur35 billion to Russia for energy supplies.