EU's new sanctions target Russian LNG resale beyond the bloc
The countries of the European Union have adopted the 14th package of economic sanctions against Russia. The new restrictions limit the resale of Russian LNG outside the European Union. What are these restrictions about? Experts from the Polish Economic Institute explain.
On June 24, 2024, member countries of the European Union approved another, the fourteenth, package of economic sanctions directed against the Russian Federation. The latest restrictions will include Russian liquefied natural gas (LNG) for the first time, although not comprehensively. These results from decision number 2024/1744 explain the Polish Economic Institute.
The EU strikes at Russia. LNG under surveillance
According to the adopted regulations, it will be prohibited, among other things, to provide services related to the reloading of Russian LNG within the European Union. The restrictions also apply to financing such activities, providing technical assistance, and brokerage. In practice, this means no possibility of reselling Russian liquefied natural gas outside the community.
The decision to extend the sanctions was made despite the opposition of some member states. Hungary actively opposed the restrictions on the import of Russian energy resources, including gas. Germany highlighted the additional burdens the new limits would impose on businesses.
Experts from the Polish Economic Institute estimate that introducing sanctions will affect only about 5 percent of the Russian gas imported into the European Union. Its main delivery channels in the first quarter of 2024 ran through Turkey (the TurkStream pipeline with an entry point at Strandzha 2 on Bulgarian territory, responsible for 37 percent of the Russian gas imported to EU countries) and through Ukraine (the Urengoy-Pomary-Uzhgorod pipeline with an entry point at Sudzha, accounting for 35 percent of imports from Russia). Together, in January-March of the current year, they accounted for 11 percent of all gas imported by the Union.
The transport of LNG, which reaches the European market through terminals in member countries, also plays a significant role. In the analyzed period, 28 percent of Russian gas delivered to the EU was liquefied gas, which accounted for about 5.5 percent of the total imported gas - calculates Kamil Lipiński, the author of the PIE report.
How much LNG comes to the EU from Russia?
In the first quarter of 2024, LNG from Russia accounted for 15 percent of the EU's liquefied natural gas import. This is the highest share since 2021 when it was 17 percent. The primary recipients were Spain (39 percent of Russian LNG supplies to Europe, covering 31 percent of the country's demand for liquefied gas) and Belgium (25 percent and 33 percent, respectively).
PIE estimates indicate that in 2023, about 14 percent of Russian LNG imported into the European Union was reloaded and resold to third countries. Among the most critical buyers were China, India, and Turkey. Companies from the maritime sector in G7 countries, Switzerland, Norway, and Australia, played a significant role in these operations. Companies from the mentioned countries handled 93 percent of the export of Russian liquefied gas, which reached over 16 billion dollars.
