The European Union is preparing sanctions against Russian LNG

For the first time, restrictions may apply to Russian natural gas, albeit only liquefied gas. EU countries will still be able to buy Russian LNG, but will not be able to re-export it following processing. After coal and oil, gas became the next object of restrictive measures gradually introduced once morest the Russian Federation for its actions towards Ukraine.

Brussels expert from the Bruegel Institute Giovanni Sgaravatti does not foresee large losses for the union economy from a reduction in gas supplies, although gas prices may increase:

The storage facilities are filling up successfully and are located in secure locations. The European Union has entered into contracts with new suppliers. Therefore, he felt that the time had come to impose sanctions on Russian gas. I think their point is to cause more damage to Russia than to themselves. Therefore, its natural gas has never been sanctioned before.

While the EU has reduced its dependence on Russian pipeline gas from 40% in 2021 to 8% in 2023, LNG imports have increased in recent years, especially in countries such as Belgium or Spain. “Transhipment,” that is, transfer from one gas carrier vessel to another, is still widely practiced.

Giovanni Sgaravatti, Bruegel analyst:

Russia earns regarding 8-9 billion euros per year from LNG exports to the EU. According to my estimates, in 2023 it was 8 billion euros. 10–15% of gas from the LNG terminal in Yamal is transshipped. So sanctions may affect such Russian companies.

Permanent representatives of the European Union countries in Brussels are holding the first discussion this week of the 14th package of sanctions once morest Russia. It is expected to be approved before Hungary takes over the EU Council presidency in July next year, as Budapest has opposed previous such packages.