EU wants to block Russian LNG, but has a major problem / US strategy and Moscow’s concern

The Kremlin said it would explore ways to overcome what it called “any illegal sanctions” the European Union imposes on its liquefied natural gas (LNG), according to Sky News.

Earlier this week, three EU sources told Bloomberg that the European Commission’s next sanctions package is expected to propose restrictions on LNG for the first time.

The proposal would not ban Russian LNG imports to Europe, but would target transshipments, which move the gas from one ship to another which then sails to its final destination.

Transfers are usually done in port areas.

Reacting, Kremlin spokesman Dmitry Peskov said: “Attempts to remove Russia from energy markets and move to more expensive markets continue. Of course, in any case, we will look for ways to overcome these illegal obstacles, unfair competition and illegal actions”.

Why sanctions on LNG now? The problem of the West, addiction

The EU announced a ban on Russian oil imports by sea immediately after the February 2022 invasion of Ukraine, but the EU bloc has not banned LNG, despite repeated requests from the Baltic states and Poland.

But Russia supplies the EU with 40% of its gas and 30% of its oil.

In fact, imports of Russian LNG into Europe have increased since the war began, with Belgium, France and Spain being the biggest buyers, Sky News writes.

Finding an alternative LNG supplier should be coordinated by the West.

Russia’s plan to expand exports of liquefied natural gas, affected by US sanctions

Russia’s plan to rapidly expand its exports of liquefied natural gas (LNG) is stalling because of US sanctions, which are delaying deliveries from a major new project, reports Bloomberg.

Gas pipelines in the Yamal peninsula Photo: Alexander NEMENOV / AFP / Profimedia

The Arctic LNG 2 facility started production in December, but so far it has not been able to export gas due to US restrictions, reports the economic agency Bloomberg, cited by Agerpres. Production was significantly reduced in February, according to data analyzed by Bloomberg. The publication Vedomosti, the first to report the drop in production, reported that Arctic LNG 2 could not export fuel and did not have enough storage space.

Novatek PJSC, the main shareholder of the unit near the Arctic Circle, intended to start deliveries by March 31. Officials of the Russian energy company did not respond to requests for comment, according to Bloomberg.

Novatek has been negotiating to sell LNG to buyers in China, but it is not known when it will be able to do so due to fears of US retaliation, sources told Bloomberg on condition of anonymity.

These developments show how difficult it will be for Russia to meet its goal of tripling LNG exports by 2030. The country, the world’s largest exporter of liquefied natural gas before the invasion of Ukraine prompted Europe to shun pipeline purchases, exported about 32 million tons of LNG last year, a fraction of the total global trade of 412 million tons.

In November, the United States imposed sanctions that targeted Novatek, but also prompted the exit of other Arctic LNG 2 investors, including TotalEnergies SE and Mitsui & Co, both declaring force majeure.

Gas production at the Arctic LNG 2 project was 83 million cubic meters in February, compared with 250 million cubic meters in January and 425 million cubic meters in December, according to data analyzed by Bloomberg.

Novatek is looking to send most of its LNG to China via the Northern Sea Route, which connects Europe and Asia, and is also trying to find buyers in India, the sources said.

sources: Bloomberg, Sky News, Reuters