Staff Reports
The European Union is considering putting a stop to the export of Russian liquefied natural gas as part of its latest round of sanctions. This move is being made in order to cut off a valuable source of revenue for Russia and to hinder its ability to fund its invasion of Ukraine. Despite facing multiple sanctions from the West in the past two years, Russia has managed to continue reaping huge profits from its oil and gas exports. Russia’s oil and gas revenue has surged to $126 billion in April, more than double the earnings from the same period last year. This has caused frustration among Western leaders, who are now targeting Russia’s growing LNG export industry as a means of inflicting economic pain.
The proposed sanctions by the EU would prevent member states from participating in the transfer of Russian LNG at key EU ports, which is then reexported to buyers in Asia and India. This would force Russia to take a longer and more expensive route to export its supplies to Asia via the Arctic. The US has also been actively working to impede Russia’s efforts to expand or bring online planned LNG export facilities, particularly the $25 billion Arctic LNG 2 facility in the Gydan Peninsula. The US sanctions have reportedly already hampered the project’s ability to export energy and resulted in significant increases in construction costs.
The Biden administration has not commented on the proposed sanctions, but outside observers believe that there is a shared goal between the US and the EU in curbing Russia’s ambitions in the LNG sector. Russia aims to triple its LNG exports by 2030, which would bring in an estimated $35 billion in annual revenue. However, the US and EU sanctions are aimed at making it difficult for Russia to pursue this goal, particularly in the case of LNG.
Additionally, Western leaders are also taking steps to impede Russia’s ability to obtain the specialized ice-class tanker ships needed to transport LNG through the Arctic. These ships are harder to come by, track, and regulate compared to crude oil tankers, making them a target for sanctions as well. The US has included these ships in its latest round of sanctions against Russia, further tightening the restrictions on Russia’s LNG export capabilities.
