EU countries kick off talks to ban re-exports of Russian LNG

The latest proposal of EU sanctions aims to prohibit trans-shipments of Russian LNG.
The latest proposal of EU sanctions aims to prohibit trans-shipments of Russian LNG. Copyright Olga Maltseva/AP
Copyright Olga Maltseva/AP
By Jorge Liboreiro
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European Union countries kicked off on Wednesday negotiations on the next round of sanctions against Russia, which for the first time targets LNG.


The proposal on the table breaks a long-held taboo in Brussels as Russian gas has been until now completely spared from any restrictions, despite repeated calls from Poland, the Baltics, the Nordics and, most passionately, Ukraine.

But the plan, designed by the European Commission, falls short of an all-out import ban, as the bloc previously did with coal and seaborne oil.

Instead, it aims to prohibit trans-shipments of Russian liquefied natural gas (LNG), meaning the practice of re-exporting LNG that arrives at EU ports to other countries.

The Centre for Research on Energy and Clean Air (CREA), an independent organisation that tracks Russian fossil fuels, estimates the bloc paid last year €8.2 billion for 20 billion cubic metres (bcm) of Russian LNG, representing 5% of the total gas consumption.

Belgium, France and Spain were the main entry points for Russian LNG.

About 22% of these supplies were trans-shipped globally,with 8% (1.6 bcm) sent to other member states, CREA says, while the rest went to China, India, Turkey and other clients.

This reflects the leading role played by Western companies in the sectors of cargo insurance and shipping services: last year, the maritime industry of G7 countries handled 93% of Russia's LNG exports, a transport valued at €15.5 billion.

The draft sanctions, sent to member states on Friday, aim to curb this lucrative business and curtail Russia's ability to move its prized supplies across the world. They also go after three LNG projects based in Russia that are not yet operational. (Reuters has identified the projects as Arctic LNG 2, Ust Luga and Murmansk.)

However, the Kremlin has proved skillful in evading this story of constraints, as it has become painfully obvious in the price cap that the G7 and Australia had imposed on Russian seaborne oil. Despite the $60-per-barrel limitation, Russia has spent the last months selling its Urals oil at a price range of between $70 and $80.

The blatant evasion has been credited to a so-called "shadow fleet" of aging, small-sized tankers that carry oil without Western-level insurance, making them harder to track.

Cracking down on this fleet is part of the latest round of sanctions, which a diplomat described as "quite substantive" as it also covers other economic sectors.

Ambassadors had an initial discussion on Wednesday but it will be weeks before the 27 countries reach a final agreement. Sanctions on the energy sector are considered highly sensitive and have in the past led to protracted talks and last-minute concessions.

If eventually approved, the sanctions will mark the 14th package since February 2022.

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