Baltic states bought twice as much Russian LPG last year

(Reuters) - Russian exporters more than doubled sales of liquefied petroleum gas to the Baltic states in 2022, some of which was sold on to Ukraine, according to data from three trading and freight-handling sources covering the region.

The leap in purchases of Russian LPG came despite sharp condemnation of Moscow's actions in Ukraine from the three Baltic states, all NATO and European Union members, as Europe struggles to find fresh sources of the fuel in a tight global market.

LPG, which is mainly used as fuel for cars, heating and to produce other petrochemicals, has been exempt from sweeping Western sanctions imposed against Russia over Ukraine.

According to Reuters calculations based on data collected from the three traders and freight handlers covering the region, Russia boosted LPG combined sales to Latvia, Lithuania and Estonia to 331,000 tons from 159,000 tons in 2022.

The increase came as Ukraine and some other countries refused to buy the Russia-sourced fuel directly.

Russian LPG sales to Latvia rose by 77% to 232,000 tons, while supplies to Lithuania jumped 8.5 times to 72,000 tons and sales to Estonia increased by 42% to 27,000 tons last year, according to the data and Reuters calculations.

The energy ministries of Latvia and Estonia did not respond to requests for comment on the data. The Lithuanian ministry declined to comment.

Russia's relations with the Baltic states have worsened sharply since Moscow launched what it calls its "special military operation" in Ukraine last February. Russia and Estonia expelled each other's ambassadors on Tuesday, and Latvia also downgraded relations with Russia.

According to the data, Russian LPG supplies to Latvia accounted for 90% of the country's total LPG imports in 2022, while Lithuania got half of its intake from Russia and the rest from Latvia.

Traders said excess volumes of LPG had been sold on from the Baltics to Ukraine in recent months. They said Latvia and Lithuania supplied some 15,000 tons to Ukraine in December alone, accounting for 15% of Ukraine's total LPG imports that month.

They said LPG from Russia is much cheaper than supplies from other countries such as Poland and Romania, as export options have been limited since Russia entered Ukraine.

"Ukrainian companies buy propane-butane (LPG) from Lithuania and Latvia, which is with high probability of Russian origin. However, the price difference of $150-$200 per ton in comparison with Poland and Romania allows (them) to turn a blind eye to the country of origin," a trader covering the Baltic states said.

He added that there is no official Ukrainian ban on importing Russian LPG. Ukraine's energy ministry did not comment when contacted by Reuters.

Other traders said that Ukraine also buys LPG directly from Lithuania's Mazeikiu Nafta plant, which is owned by Poland's Orlen, though its total share in fuel supplies to Ukraine is relatively small.

(Reporting by Reuters; Editing by Jan Harvey)

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