Sanctions against Russia: the European Union attacks Russian liquefied gas, but not too much

Sanctions against Russia: the European Union attacks Russian liquefied gas, but not too much
Sanctions against Russia: the European Union attacks Russian liquefied gas, but not too much

It was necessary to wait for more than two years of war in Ukraine for the Twenty-Seven to consider sanctioning (a little) Russian gas, known to be a gold mine for Moscow. This week, the European Union reached agreement on a fourteenth package of measures against Russia, which notably includes a ban on re-exports of Russian liquefied gas (LNG) from European ports to other countries around the world. The details of these sanctions are still unknown, although they will be officially approved by Member States this Monday. But a priori, if the EU begins to break down a taboo, it is not (yet?) a question of completely banning imports of Russian gas by ship – and even less those by pipeline.

As a reminder, the invasion of Ukraine forced Europeans to wean themselves as quickly as possible from Russian energy, on which they were largely dependent. In 2022, they will do without oil and coal from Russia. For its part, Moscow has sharply reduced gas exports via pipeline to Europe. But in this energy standoff, LNG was spared. Europeans have even increased imports by 37.7% compared to 2021, according to a Reuters analysis. This concludes that a tenth of Russian gas previously shipped by pipeline to the EU has been replaced by LNG deliveries.

Belgium, very concerned

But these are not all intended for the European market. Moreover, according to the Center for Research on Energy and Clean Air, “Russian LNG imports represented 5% of EU gas consumption, showing that the Union is relatively little dependent on this product”. Concretely, at present, several billion cubic meters of Russian LNG arrive each year in EU ports, mainly in Zeebrugge, Belgium, Montoir-de-Bretagne, France, and Bilbao, Spain . Around 20% of this volume is transferred to other ships (we speak of “transshipment”) and then sent elsewhere in the EU and especially in the world, particularly in Asia. It is therefore these re-exports that the Twenty-seven have decided to tackle. Not without difficulty.

This fourteenth package of sanctions has been in negotiations for weeks. He first encountered principled opposition from Hungary, which had vowed to block any measure targeting Russian energy. But it was Germany that slowed down for a long time. Worried about its businesses, Berlin successfully campaigned against a “no to Russia” clause. This was to force European firms to ensure that more products – beyond military ones – did not end up in the hands of Moscow, via third countries. As for gas sanctions, EURACTIV points to the potential impact on German-registered Securing Energy for Europe GmbH (SEFE), which has an LNG transfer contract to India. It also remains to be seen what the consequences will be for the manager of the Belgian gas network Fluxys, which signed a long-term contract worth a billion euros with the company Yamal, named after a gigantic gas site. Russian. On Thursday, Fluxys Belgium shares fell 6% on the stock market, reaching their lowest level in 15 years, according to De Tijd.

How Russia is exploiting a loophole in European sanctions to enrich itself

What impact on Russia?

What about the consequences for Moscow? Experts do not all assess the impact of this ban on the re-export of Russian gas from Europe in the same way. Some predict a limited effect, with gas transshipments to Asia via EU ports accounting for only around 10% of Russia’s total LNG exports. It also remains to be seen when this measure will come into force. But in the long term, this risks complicating Moscow’s affairs. Indeed, Yamal is located in Siberia. “From November to June, LNG exported […] must be transported by icebreaker ships to access international markets,” explains researcher Ignacio Urbasos Arbeloa, in an analysis for the Royal El Cano Institute. Given the difficulty of passing through the Bering Strait and the need to optimize the use of these vessels, which are very rare and expensive, European ports in warm waters are emerging as key destinations, to transfer gas to conventional LNG carriers. , destined for Asia. Ignacio Urbasos Arbeloa thus believes that the sanctions targeting transshipment “impose a very high cost on Russia without significantly harming the interests of the EU” and its gas supplies.

These sanctions also recall a key lever available to the West, given its virtual monopoly on insurance and maritime transport services. According to Euronews figures, the maritime industry of the G7 countries handled 93% of Russian liquefied gas exports… Note that the fourteenth sanctions package would also aim to limit the financing of three new LNG projects based in Russia.

Beyond gas, additional measures are planned to avoid circumvention of sanctions, in particular via subsidiaries that EU companies have in third countries. In addition, more than 100 new people and entities are targeted (asset freeze, ban on entering the EU), bringing to more than 2,200 the number of Russian actors sanctioned since the start of the war in Ukraine. Belgium, which chairs the EU Council until June 30 and led the negotiations on these measures, welcomed a “powerful and substantial sanctions package”.



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