Breaking the Russian Gas Pipeline: EU Takes Targeted Approach to Sanction Russia through LNG

The European Union is intensifying its efforts to curb the Russian military campaign in Ukraine by targeting one of Moscow’s significant revenue sources: liquefied gas (LNG). After more than two years since the invasion began, Brussels is now focusing on re-exporting Russian LNG, which could have a major impact on countries like Spain. Last year, the EU purchased 18 billion cubic meters from Russia, with around 22% of European LNG imports being re-exported to other countries.

The proposal, to be discussed by EU Member States, aims to prohibit the transshipment of Russian LNG through EU facilities to third countries, including ship-to-ship and ship-to-shore transfers. The European External Action Service is not proposing a complete ban on imports to the EU but instead suggests re-exporting the gas to countries outside the EU. If implemented, these sanctions could greatly impact companies like Naturgy, which has a significant contract for the supply of Russian LNG.

The EU recognizes that Russia profits significantly from the sale and transportation of LNG and aims to disrupt this revenue stream with proposed sanctions on re-exporting. The plan includes measures to prohibit new European investments in the Russian LNG sector, impose tougher sanctions on Russian ships and restrict the use of European ports by ships contributing to Russia’s war efforts in Ukraine. However, with increasing pressure to escalate sanctions on Russian LNG imports, the possibility of a ban is becoming more real. Despite the desire to reduce imports of Russian LNG, European countries like Spain have limited power to impose bans due to the EU’s authority over foreign trade and sanctions decisions.