EU adopts new sanctions against Russia, gas included for first time

European Union officials have adopted a 14th package of sanctions against Russia over its invasion of Ukraine. For the first time, the sanctions will also affect natural gas, as reported by Reuters. Specifically, they will concern liquefied natural gas (LNG). The aim is to curb Russia's revenue from exports of this commodity.

As EU foreign ministers announced on Monday 24 June, the bloc adopted its 14th package of sanctions against Russia. The package includes restrictions relating to Russian LNG exports. The transshipment of Russian cargoes within the bloc for subsequent export outside the EU is now prohibited. The restrictions will fully enter into force after a nine-month transition period on 26 March 2025. They will apply only to newly concluded contracts effective from 26 June this year.

As the European Commission notes, the measure is intended to raise Russia's logistics costs; the new restrictions do not prohibit LNG supplies to Europe or anywhere else. They only ban the transfer of cargoes from one ship to another for subsequent delivery outside the EU. Russia uses European ports in this way for cargoes headed to Asia, accounting for around 10 % of total Russian LNG exports.

According to market participants contacted by Reuters, the sanctions in this area will have only a limited impact given the above. Europe can still buy Russian gas, whether via pipelines or in the form of LNG supplies. As we reported in this regard, Russia was even the second-largest supplier of gas to Europe in May. The impact is therefore expected to be in the order of millions of EUR.

Looking at last year, Russia supplied around 25,1 bn m3 of natural gas to the EU via pipelines and a further 17,8 bn m3 in the form of LNG. This represented shares of last year's EU gas imports of 8,7 % and 6,10 %, respectively.