EU hits Russia with first sanctions on LNG shipments

The sanctions package—the 14th since the outbreak of the war in 2022—bans the re-export of Russian LNG shipments destined to third countries through EU ports, covering ship-to-ship and ship-to-shore transfers, as well as re-loading operations.

The measure is aimed at making Russia’s gas export activities more difficult and hitting the country’s energy revenue, but it falls short of restricting imports of Russian LNG, which EU members are still allowed to purchase despite plans to phase out Russian fossil fuels by 2027.

The EU is also prohibiting new investment and provision of technology, goods and services for the completion of LNG projects under construction—such as Arctic LNG 2 and Murmansk LNG—and imposing sanctions on vessels that are part of Russia’s shadow fleet and used to get around oil price caps and other restrictions.

EU ambassadors agreed on the package last week. The approval was delayed several times due to resistance from some member states over different parts of the deal, notably from Germany and Hungary.

“These measures are designed to target high-value sectors of the Russian economy, like energy, finance and trade, and make it ever more difficult to circumvent EU sanctions," the EU Council said on Monday.

In response to the bloc’s latest move, Russian Deputy Foreign Minister Alexander Grushko said in comments carried by state news agency TASS that the EU was continuing to escalate political, economic and military tensions with Moscow.

The transshipment ban likely means that Russian players will have to resort to longer shipping routes, Kpler analysts said in a recent report.

According to the data provider, Russia is the second-largest supplier of LNG to the EU after the U.S. So far this year, the EU has received 43.11 million metric tons of LNG, with about 21% coming from Russia and 44% from the U.S. In 2023, Russia exported a total of 32.3 million tons of LNG, with around 51% of these exports delivered to Europe and 48% to Asia.

DNB Markets’ senior energy analyst Helge Andre Martinsen said transshipments of Russian LNG to Asia via EU ports represent only a small portion of the Kremlin’s total LNG exports, and that the new sanctions might actually increase Russian LNG volumes to the EU.

“Imports of Russian LNG, especially to Belgium, France and Spain, have increased and make the EU the largest buyer of Russian gas," he said in a note to clients last week. “Consequently, we will not be surprised if the previously re-exported Russian LNG out of Europe, which is small in size, now instead will be absorbed by European markets."

As part of the package, the EU imposed tighter export restrictions against 61 new entities involved in the circumvention of trade restrictions or engaged in the procurement of material support for Russian military operations, including some located in China, Turkey and the United Arab Emirates.

It also banned EU entities operating outside Russia from connecting to the Russian Central Bank’s SPFS—the Russian equivalent of the Swift financial transfer system—as well as transactions with banks facilitating operations for the export, supply or transport of goods and technology that can be used for weapons.

Among other measures, the EU prohibited political parties, think tanks and media providers in the bloc from accepting funds coming from Russia or its proxies, and called on EU parent companies to ramp up checks on their third-country subsidiaries to prevent them from circumventing sanctions. It also further restricted the export of helium, chemicals and other equipment that could support Russia’s industrial base.

The EU sanctions come after the U.S. earlier this month set out restrictions on more than 300 entities and individuals in China and elsewhere as it looks to curb Russia’s access to technology and equipment for its war in Ukraine.

Mauro Orru contributed to this article.

Write to Giulia Petroni at giulia.petroni@wsj.com