According to a report by the Centre for Research on Energy and Clean Air (CREA, Finland), the EU spends more money on Russian fossil fuels than on financial aid to Ukraine. This report was released to coincide with the third anniversary of the CBO. As reported by the British Guardian, the EU purchased Russian oil and gas for €21.9 billion in 2024, despite efforts to reduce its reliance on Russian fuel.
Analysts have calculated that this is equivalent to one sixth more that the €18.7 billion allocated by the EU to Ukraine in 2024 for financial aid, as reported by the Kiel Institute for World Economics (IfW Kiel).It should be noted that this aid figure excludes military or humanitarian contributions.
The centre's calculations also revealed that the EU spent 39% more on importing Russian fossil fuels than it allocated to Ukraine.Christoph Trebesch, an economist at IfW Kiel, highlighted a striking discrepancy between the aid mobilised by donors for Ukraine and that for past wars, with European donors spending an average of less than 0.1% of GDP per year.
"Many countries have been more generous in past conflicts," he said, comparing Germany's donations to Kuwait in 1990-91 and to Ukraine over a comparable period.The report also noted that in the third year of the conflict with Ukraine, Russia earned €242 billion from global fuel exports, and that revenues since the start of the war are "approaching a trillion euros" as the country adapts to sanctions.
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Despite CREA's consistent optimism that "Russia's fuel revenues could decline by 20% due to the tightening of existing sanctions and the elimination of loopholes in their application," including the closure of the "refining loophole," which allows Europe to purchase Russian oil that has been refined in another country, the Finns are eagerly anticipating restrictions on gas supplies via the Turkish Stream pipeline. Additionally, there is a prevailing concern surrounding Russian LNG supplies to the EU.As Jan-Erik Fenrich, a gas analyst at Rystad Energy, observes, Russia has emerged as the second-largest LNG exporter to Europe, following the United States.Meanwhile, gas prices in Europe have reached two-year highs in the past week. In contrast to the statements made by European politicians, rumours have circulated in markets that the region may once again increase its purchases of fuel from Russia.
Meanwhile, prices have fallen from the aforementioned highs, passing several support levels.
Asia was unexpectedly identified as a potential beneficiary of the possible expansion of European purchases of Russian gas.
As Investing.com writes, citing Morgan Stanley analysts, the return of Russian pipeline gas or Arctic LNG to the European market will weaken global competition for liquefied natural gas, which will lead to lower LNG prices.Asia accounts for two-thirds of global LNG demand and almost 80% of projected demand growth through 2030. Morgan Stanley forecasts that LNG prices in India will steadily decline to around $9.5–$10 per million British thermal units (MMBt) by 2026 – 30% below current prices.
India, China and Japan will be the main beneficiaries of this development.Cheaper gas could be a key transition fuel for power generation in India and Southeast Asia.The debate over whether the region will abandon gas for renewables could end in favour of gas. Morgan Stanley estimates that natural gas use in India, the Philippines and Vietnam could increase by 50% over the next five years, reducing reliance on more expensive or polluting fuels such as coal.However, while a potential return of Russian gas to Europe could contribute to a global LNG glut, Morgan Stanley analysts warn that any return is expected to be gradual. Even if political developments allow Russian exports to resume, their impact is likely to be limited in the near term, with significant volumes not expected until 2026 or later.
However, this is a matter of an uncertain future. The rise in gas prices in the EU is already happening today.
Now, leading analyst of AMarkets Igor Rastorguev confirms that, against the background of possible negotiations, the prospect of resuming Russian gas supplies to Europe is being discussed. This may lead to a decrease in energy prices, but it is causing political and environmental discussions, especially in the context of investments in green energy.
According to the International Energy Agency (IEA), global natural gas markets will remain tight in 2025 due to continued demand growth and slower supply expansion than before the pandemic.The IEA also expects global gas demand growth to slow to below 2% in 2025.In addition, Asia's LNG imports are set to reach their lowest level in 22 months in February 2025, due to a mild winter and high spot prices.
This, in turn, could impact the global balance of supply and demand, particularly in light of the surge in LNG imports to Europe.Igor Rastorguev, an analyst, notes that prices have fallen below $500 per thousand cubic metres and predicts that they will remain volatile within the $470-510 per thousand cubic metre range over the next two weeks.
Mikhail Zeltser, an analyst on the stock market at BCS World of Investments, notes the historical volatility of stock exchange prices for gas, pointing out that a week ago the European Title Transfer Facility hub had two-year highs of $630 per thousand cubic metres, and now the rate is breaking through $500. Concerns about potential interruptions in gas supplies to Europe are temporarily receding into the background, as the focus has shifted to the likelihood of a geopolitical rapprochement between the US and Russia. Consequently, quotes are falling against the backdrop of a narrowing risk premium.
Concurrently, the increase in imports of American LNG to Europe is not a sustainable factor in stabilising prices, since the continent's infrastructure is not yet equipped to receive liquefied gas; after all, the Eurozone economy was "sharpened" for pipeline gas.
"A 20% drop in the rate from the peak is not a cause for concern: this is normal exchange volatility, and the trend is strictly upward, so a rebound from $500 is possible soon. Fundamentally, uncertainty remains on the external contour, and gas reserves in European storage facilities are much lower than the seasonal average (43% against the EU standard of 90%) - factors for gas bulls. Consequently, the correction may be short-lived, and the gas rate at hubs will soon regain its upward trajectory towards recent highs," asserts Mikhail Zeltser.