G7 INTERVIEW: EU sees no need for Russian LNG imports as possible gas suspension looms: Simson

The EU considers it "possible" that Russia will halt natural gas supplies in 2023 to Europe but the bloc is prepared with contingency plans, European Commissioner for Energy Kadri Simson told S&P Global Commodity Insights on April 15, as it also sees no need for Russian LNG imports.

"There is no reason to speculate but we have our plans ready for this kind of situation," Simson said on the sidelines of the G7 Ministers' Meeting on Climate, Energy and Environment in Sapporo, northern Japan.

"We do have agreements on solidarity so member states can support their neighbors if they are in need but we have to also keep in mind that Russia does not have any alternative supply routes" for sales.

Simson's remarks came as the EU has warned there is a "serious" risk of gas shortages next winter given the continued tight market balance and concerns over a complete halt in Russian gas supplies.

The EU Council on March 30 formally adopted a regulation that extends member states' voluntary 15% gas demand reduction target for one year until the end of March 2024.

Asked about expectations about EU member states halting Russian LNG imports in 2023, Simson said that Russian LNG imports are "not necessary because last year companies that bought Russian LNG mainly from countries that never received Russian pipeline gas so they were not impacted directly by the scarcity of pipeline gas.

"This is why we agreed last time we met with European energy ministers that we will propose a solution that if Russian LNG is not necessary on the security of supply aspect, then governments can restrict their access to LNG terminals."

There are currently no EU-level sanctions targeting the import of Russian gas and LNG, though some countries -- particularly in the Baltic region -- have already introduced bans.

EU energy ministers agreed on March 28 to add a new clause to the EU's planned gas decarbonization package that would give member states the ability to restrict imports of gas and LNG from Russia.

Following a meeting in Brussels, the EU Council said it had added a "security clause" allowing member states to take "proportionate measures" to temporarily limit imports from Russia and Belarus.

Energy transition

Simson was speaking at the G7 climate and energy ministerial meeting, where the energy transition and security are among the key themes of discussion.

Asked whether the G7 should lead the way to pursue practical energy transition, Simson said: "Yes I do believe that the G7 is crucial for leading the accelerated green transition and our member states actually made very ambitious commitments in this regard.

"But currently we are facing the energy crisis" created by Russia's invasion of Ukraine, she said. "I heard today during an opening session that all the G7 members were most clear about we have to help [developing] countries that face challenges."

Describing talks on critical minerals at the G7 meeting, Simson said: "There were no disagreements, everybody shared an understanding that this is one of the challenges ahead of us and unless we will address this issue, this might create problems and will hold us back despite our very ambitious announcements on green transition.

"I think at this forum that everybody understands that this is next challenge ahead of us."

EU officials unveiled a sweeping proposal March 16 that would reduce Europe's reliance on imports for the metals and materials that are essential to the continent's decarbonization efforts.

The Critical Raw Materials Act, or CRMA, outlines a set of plans to bolster supply chains of select energy transition materials by encouraging domestic production, boosting international cooperation and reducing demand through recycling.

"For us it was very important that accelerating our clean transition will also create a need for critical raw materials and access to clean technologies.

"We should not end up in situation where we're too dependent on one single supplier. That means that we need a network, a wider partnership of trusted partners. This was also behind our proposal, the Critical Raw Materials Act," Simson said.

Asked whether the Critical Raw Materials Act and other EU initiatives to build alliances on critical mineral supply chains will be quick enough to meet the demands of the energy transition, Simson said: "I know that we don't have any time to waste."