EU Council formally adopts 14th Russian sanctions package targeting LNG

The EU Council has formally adopted its 14th sanctions package against Russia, it said June 24, targeting the country's LNG sector for the first time.

EU ambassadors had first agreed June 20 on the content of the package, which also targets tankers that are part of Russia's "dark fleet" that circumvent the West's so-called "price-cap" mechanism.

"The 14th package of sanctions demonstrates our unity in supporting Ukraine and seeking to limit Russia's criminal activities against Ukrainians, including efforts to circumvent EU measures," the EU's top diplomat Josep Borrell said in a statement.

The relevant legal acts to enforce the new package will soon be published in the Official Journal of the EU, the Council said.

On LNG, the EU agreed that its facilities should not be used to transship Russian LNG to third countries. This, the Council said, would reduce the "significant revenues" that Russia derives from LNG sales and transport.

"The EU will forbid reloading services of Russian LNG in EU territory for the purpose of transshipment operations to third countries," it said.

"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 Council said the European Commission would monitor the implementation and development of the decision and may propose mitigating measures if necessary.

The EU will also prohibit new investments, as well as the provision of goods, technology and services aimed at completing LNG projects under construction in Russia, 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," it added.

Related infographic: European LNG imports tracker

Transshipment impact

A ban on transshipments could be expected to see more Russian LNG remain in Europe at the expense of Asia.

European ports such as Zeebrugge are used to reload Russian LNG carried by specialist ice-breaker vessels from the Novatek-operated Yamal LNG project onto conventional LNG vessels for re-export to markets such as Asia.

Sanctions against transshipment would mean any Asia-bound cargoes sent westward might have to be carried all the way by the ice-breaking vessels, meaning a much longer voyage.

To date, the EU has not imposed any EU-wide sanctions on the import of Russian gas and LNG, but the EC has said it wanted to phase out all fossil fuel imports from Russia by 2027.

Further, the EU's revised EU gas package, which was formally approved by the European Council in May, gives member states the option to restrict access of Russian gas and LNG into their gas systems at the national level.

According to S&P Global Commodity Insights data, Russian LNG exports to the EU totaled 14.2 million mt in 2023, up slightly from 14 million mt in 2022.

So far in 2024, Russian LNG exports to the EU have reached more than 8.2 million mt, led by France (3 million mt), Spain (2.6 million mt) and Belgium (1.9 million mt), the data showed.

It comes as spot LNG prices for delivery into Europe continue to trade above $10/MMBtu.

Platts, part of Commodity Insights, assessed the Northwest European LNG marker on June 21 at $10.71/MMBtu.

Tanker measures

For the first time, the EU has also adopted a measure targeting specific vessels contributing to Russia's war, which are subject to a port access ban and ban on provision of services.

"These vessels can be designated for various reasons such as the transport of military equipment for Russia, the transport of stolen Ukrainian grain, and support in the development of Russia's energy sector, for instance through the transport of LNG components or transshipments of LNG," the Council said.

"This measure also targets tankers part of Putin's dark fleet which circumvent the EU and Price Cap Coalition's caps, while adopting deceptive shipping practices in complete disregard of international standards," it said.

27 vessels have been targeted on these grounds.