On Thursday, European Union diplomats announced that the EU member states have reached a consensus on the 14th round of sanctions imposed on Russia for the ongoing conflict in Ukraine, which includes for the first time restrictions on Russian natural gas.
The plan prohibits the export of Russian liquefied natural gas (LNG) from EU waters, but does not implement a comprehensive import ban like the EU did in 2022 on coal and seaborne oil (Moscow’s two major sources of revenue).
Instead, EU companies will still be able to purchase Russian pipeline LNG but are prohibited from re-exporting it to other countries, a practice known as “transshipment”.
Belgium, France, and Spain are the major importers of Russian liquefied natural gas.
Experts in the natural gas market have indicated that the measure will have minimal impact, as only about 10% of Russian LNG exports are transshipped through EU ports to Asia.
The new EU sanctions aim to curb Russia’s lucrative business, thereby restricting Russia’s ability to continue funding its war in Ukraine. The package of measures also includes sanctions on three Russian LNG projects – Arctic LNG 2, Ust Luga, and Murmansk.
The EU’s agreement on the new round of sanctions comes at a delicate moment on the Ukrainian battlefield, with Russian forces attempting to exploit new momentum to further seize territory.
Belgium, the current EU presidency holder, stated on the social media platform X that the plan “plugs the holes and maximizes the impact of existing sanctions”. The new set of sanctions also includes a provision that allows Sweden and Finland to cancel contracts for Russian LNG.
EU countries debated the new measures for over a month, ultimately toning down a proposal by the European Commission, pushed by Germany, aimed at preventing further sanctions evasion. The proposal required EU companies’ subsidiaries in third countries to contractually prohibit the re-export of goods to Russia. The EU seeks to block the circulation of dual-use technologies like washing machine chips that could be used by Russia for military purposes.
An EU diplomat mentioned that Germany has requested an impact assessment, which could be incorporated later.
Another diplomat indicated that the 14th round of negotiations also included “remedies” that allow European companies to claim compensation for losses incurred due to Russian retaliation.
Ursula von der Leyen, the President of the European Commission, stated on X that “this rigorous package will further hinder Russia’s access to critical technologies, deprive Russia of energy revenues, and address Putin’s shadow fleet and shadow banking networks overseas.”
Some measures target the “shadow fleet” composed of aging small oil tankers. Russia uses these tankers to bypass the G7’s price cap of $60 per barrel for Russian seaborne oil. In recent months, Russia has been selling Urals oil at prices ranging from $67 to $75 per barrel.
Diplomats stated that EU countries have included these related oil tankers and at least two Russian ships transporting military equipment from North Korea on the sanctions list.
Since Russia’s full-scale invasion of Ukraine in February 2022, the relationship between North Korea and Russia has been increasingly close. This week, after Russian President Putin’s visit to Pyongyang, both countries reached an agreement to provide immediate military assistance in the event of armed aggression.
In summary, the EU sanctions list has added 47 entities and 69 individuals, bringing the total number of sanctioned entities to 2,200.
The new sanctions measures will come into effect next week after being published in the official EU journal.