Europe Imposes First Ban on Russian LNG

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--European Union (EU) nations have agreed to greatly restrict the transport of Russian liquified natural gas (LNG) in European waters as part of the latest round of economic sanctions.

It is the first time that Europe has imposed any kind of ban on the export of Russian LNG and comes on top of previous energy sanctions against Russian exports of oil and coal, imposed because of its invasion of Ukraine in 2022. Russia relies on large ice-breaking tankers to transfer gas from its Arctic fields to EU ports for shipment onto Asia. The agreement will stop Russian exporters from using EU ports to transfer gas between large tankers and smaller vessels destined for third countries. This covers both ship-to-ship transfers and ship-to-shore transfers, as well as reloading operations. The sanctions also include a ban on providing equipment or services to a number of major Russian LNG projects. The sanctions will take effect after a nine-month transition period. They will not impact gas sent via pipelines into Euirope to some central European countries like Austria via Ukraine and Turkey.

"In order to ensure that EU facilities are not used to tranship Russian liquified natural gas (LNG) to third countries, and thereby reduce the significant revenues that Russia derives from LNG sale and transport, the EU will forbid reloading services of Russian LNG in EU territory for the purpose of transshipment operations to third countries," stated the European Commission (EC). "This covers both ship-to-ship transfers and ship-to-shore transfers, as well as re-loading operations, and does not affect import but only re-export to third countries via the EU. The European Commission will monitor the implementation and development of this decision and may propose mitigating measures if necessary."

It added: "Furthermore, the EU will prohibit new investments, as well as the provision of goods, technology and services for the completion of LNG projects under construction, such as Arctic LNG 2 and Murmansk LNG. Import restrictions are introduced on Russian LNG through EU terminals not connected to the natural gas system."

The sanctions fall short of a total ban on buying Russian LNG in Europe, but it is the first time that the EU has tackled Russian gas exports--something it was highly reliant on when Russia's invasion began and, later, when Russia stopped pipeline gas flows to Europe in 2022. The share of Russian pipeline gas in the EU dropped from more than 40% in 2021 to roughly 8% in 2023, according to figures from the European Council. For pipeline gas and LNG combined, Russia accounted for less than 15% of total EU gas imports. The drop was possible mainly thanks to a sharp increase in LNG imports and an overall reduction of gas consumption in the EU. In 2023, Norway and the U.S. were the top suppliers of gas--Norway provided almost 30% of all gas imports with additional supplies coming from a number of North African countries, the U.K. and Qatar.

"This hard-hitting package will further deny Russia access to key technologies," said European Commission President Ursula von der Leyen. "It will strip Russia of further energy revenues. And tackle Putin's shadow fleet and shadow banking network abroad."

However, some critics claimed that the sanctions--which were undermined and delayed by Germany and Hungary's opposition--do not go far enough. "Although the trans-shipment ban makes Russia's gas exports more difficult, only a complete ban on imports would really put the Russian gas business from the Arctic under pressure," Petras Katinas, an energy analyst at the Centre for Research on Energy and Clean Air (CREA), told Euronews. "Without the nearby EU ports, gas transportation on special icebreaker LNG tankers would hardly be economically viable."

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