EU targets LNG sector in new sanctions against Russia

European Union countries have agreed to a new round of sanctions against Russia, targeting its lucrative liquefied natural gas (LNG) sector for the first time.

The bloc’s latest package, the 14th since Russia launched its full-scale invasion of Ukraine, would “strip Russia of further energy revenues”, said European Commission President Ursula von der Leyen on Thursday in a post on X.

The measures, which do not include a prohibition on the purchase of Russian LNG by EU countries, ban the re-export of Russian gas to third countries via European waters.

Gas market experts say the ban will have little effect since Europe will still buy Russian gas, and trans-shipments via EU ports to Asia represent only about 10 percent of total Russian LNG exports.

European ports matter for Russia since the continent offers a key route for LNG exports from frozen Arctic ports to Asian markets in winter months.

The Belgian port of Zeebrugge and the French port of Montoir are especially important hubs for re-exports to countries such as China, Taiwan and Turkey.

Additional measures in the package aim to make it more difficult for Russia to use a “shadow fleet” of vessels with obscured origins to get around EU sanctions on Russian crude oil.

The EU is also hitting Moscow’s SPFS bank messaging system, used by Russia to try to ease the effects of being cut off by the West from the global SWIFT financial transfer system.

🇪🇺 EU Ambassadors just agreed on a powerful and substantial 14th package of sanctions in reaction to the Russian aggression against Ukraine.

This package provides new targeted measures and maximises the impact of existing sanctions by closing loopholes.

— Belgian Presidency of the Council of the EU 2024 (@EU2024BE) June 20, 2024

Watered down

Belgium, which holds the rotating EU presidency, described the sanctions as “powerful and substantial” on Thursday.

“This package provides new targeted measures and maximises the impact of existing sanctions by closing loopholes,” it posted on X.

But negotiations, which dragged on for more than a month, ultimately saw a watering down of one of the commission’s key proposals under pressure from Germany.

The proposal would have obliged EU firms to prevent the re-export of their sanctioned products to Russia via third countries, including former Soviet states, Turkey, and the United Arab Emirates.

The EU is looking to clamp down on the flow of dual-use technologies, such as washing machine chips, that could be used by Russia on the battlefield.

EU diplomats said Germany had asked for an impact assessment, and the measure could be included at a later date.

They cited German concerns over business regulation and requests for changes as the main reason why the new sanctions on Russia took so long to finalise.

Diplomats said several more Chinese firms accused of aiding Russia’s military were also being added to a blacklist preventing companies in the European bloc from trading with them.

Restrictions were also being placed on political parties, think tanks and media providers accepting money from Russia, to try to curb alleged meddling by Moscow.

Overall, 47 new entities and 69 individuals were added to the EU sanctions list, bringing the total to 2,200. The package is set to be formally adopted when EU foreign ministers meet on Monday.

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