MOSCOW, September 30. /TASS/. Spain’s abandonment of Russian liquefied natural gas (LNG) could lead to higher fuel prices and increased production costs in a number of energy-intensive industries, like the chemical industry, metallurgy, and fertilizer production, political analyst Ilya Grashchenkov told TASS.

Earlier, Spanish Foreign Minister Jose Manuel Albares said that Madrid intends to comply with the EU restrictions on the supply of Russian LNG despite the existing long-term contracts of Spanish companies. This January the EU Council approved a phased ban on imports of Russian gas. For LNG supplies under long-term contracts, the ban should come into effect from next year.

"The main risk is related precisely to the price. Higher gas prices will affect electricity and production costs. The most vulnerable sectors are the chemical industry, metallurgy, and the production of fertilizers, ceramics, glass, cement, and paper. The scale of costs will depend on the situation in the global LNG market," Grashchenkov said.

According to him, Spain will most likely be able to avoid a direct gas shortage. "Spain is technically ready to replace Russian LNG. It has a well-developed network of terminals, supplies from Algeria, and the ability to increase purchases from the United States, Nigeria, and other countries. This is why the risk of a shortage is low, but gas may become more expensive, especially during a cold winter," the expert noted.

Grashchenkov also drew attention to the possible legal consequences of the cessation of supplies.

"The EU ban gives Spanish companies grounds to claim force majeure, but it does not automatically cancel contracts. This is why the likelihood of compensation claims and lengthy arbitration disputes remains, especially regarding an agreement between Naturgy and Yamal LNG, he explained.

According to the political analyst, Spain’s well·developed LNG infrastructure will not allow it to fully take on the role of the main gas supply channel to other EU countries.

"Spain is capable of receiving large LNG volumes, but its capacity to transfer gas to France and further to Europe is limited. This is why it may become a regional hub, but not the EU’s main gas gateway. At the same time, Europe’s dependence on American LNG will indeed increase," Grashchenkov concluded.