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For the first time since Moscow launched an all-out attack on Ukraine more than two years ago, the European Union is expected to target rocket launchers with sanctions targeting Russia’s lucrative gas industry, Politico reported.

The proposals on the table involve only a fraction of the billions of dollars Moscow gets from LNG each year, leaving plenty for its war chest, the report said.

The European Commission is preparing to issue a proposed ban on the resale of Moscow’s liquefied natural gas at EU ports as early as Friday, according to three EU diplomats. limit.

The LNG sanctions are aimed at stifling a lucrative business in Moscow that enables its energy cargoes to be transported around the world. However, as written in the draft proposal (which is still subject to change), the penalties would only affect about a quarter of Russia’s €8 billion in LNG profits, according to experts and data analyzed by POLITICO.

Meanwhile, there have been repeated warnings that EU and Western efforts to curb Moscow’s fossil fuel revenues have largely failed. Although the EU has banned imports of Russian coal and seaborne crude oil, numerous loopholes and evasion strategies still allow money to flow to the Kremlin.

Meanwhile, the EU has made little progress in punishing Moscow’s LNG industry. Although the fuel accounted for just 5% of EU gas consumption last year, it remains a cash cow on which the Kremlin relies to wage war. France, Spain and Belgium have been the largest centers for supercooled natural gas, with much of it exported to countries such as Germany and Italy.

– Break the ice
Stopping EU resales of Russian LNG would require Moscow to overhaul its current business model – no small feat.

Without European ports as convenient transit points, Russia would have to use specially equipped icebreakers to cut through Arctic sea ice, which is in short supply, to transport natural gas to Asia.

Laura Page, a natural gas expert at data analytics firm Kpler, said that would harm Russia’s $27 billion Yamal LNG plant in far north Siberia.

“If they can’t transship in Europe, they may have to make long journeys with ice-class tankers,” she said. That means Russia “might not be able to move as much cargo out of Yamal because their ships can’t get to Yamal.” .

Petras Katinas, an energy analyst at the Center for Energy and Clean Air think tank, said the shift would reduce Russia’s LNG revenue by 2 billion euros based on last year’s data.

That’s a lot of money, but it accounts for only 28% of Russia’s LNG profits and just over a fifth of its exports to the EU last year.

Catinas said the ban “is a good first step forward” but “it is not enough” if the EU wants to curb the Kremlin’s cash flow.

Meanwhile, Catinas said potential sanctions against Russia’s LNG projects, including Arctic LNG 2, its Murmansk plant and the UST Luga LNG terminal, were a “paper tiger” because none of the projects currently have any funding for the project. Shipping goods to Europe.

The EU proposal is also fraught with legal complexities.
Depending on how the commission defines “transshipment,” Catinas said the importers most affected may be Spain’s Naturgy, France’s Elengy and Belgium’s Fluxys, which all have long-term contracts with Russia’s Yamal LNG.

But he added that it was unclear whether EU sanctions would allow the companies to safely terminate contracts unilaterally without facing penalties or legal action from their Russian partners.

A spokesman for Fluxys said it would “fully comply” if sanctions were imposed, but noted that the company had “no control” over the origin of the LNG stored at its storage sites and was “obliged to respect contractual agreements with its customers”.

Elengy and Naturgy did not respond to requests for comment. Novatek, Gazprom and RusGazDobycha, the owners and operators of Russian LNG projects that are being considered for EU sanctions, also did not respond to questions from POLITICO.

-liquid luck
The commission has so far refused to approve LNG despite repeated requests from the Baltic states and Poland. However, the new proposals appear to be rapidly gaining political support.

“As part of a new package of sanctions against Russia, the federal government is calling for a gradual halt to the transshipment of Russian liquefied natural gas at European ports,” Belgian Energy Minister Tiny van der Straten said on Tuesday. “We must… stop increasing Putin’s war chest.”
German Economy Minister Robert Habeck said last week that he would “very much support” restrictions on Moscow LNG – crucial support given Germany’s size – while Italian Energy Minister Gilbert Gilberto Pichetto Fratin told Politico on Sunday that the country had “no reason to object” to such restrictive sanctions.

There is also growing pressure on EU countries to toughen penalties on Russian fossil fuels, some of which offer diminishing returns. Just this week, a group of ocean tanker insurers that control much of the world’s market said G7 measures to cap Russian oil revenues at $60 a barrel were “increasingly difficult to enforce” as Moscow relies on freedom from Western control Parallel trade conducted by shadow ships.

Still, Brussels may struggle to get all 27 capitals to join the new LNG penalties, a requirement for any sanctions to pass. Hungary, for example, is likely to veto the move because of its track record of blocking restrictions on Russian gas on principle.

Meanwhile, for others, the sanctions package is an anticlimax.

An EU diplomat who spoke on condition of anonymity said frankly, “It’s disappointing… that we have waited so long for proposals for the 14th package.”

The diplomat added that the sanctions “are designed to damage the Russian economy and its ability to wage war in Ukraine”. “not to mention [reason why] The 14th package should be comprehensive and powerful.

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