EU sanctions on Russian LNG not to hurt Asian market

Proposed new European sanctions targeting transshipments of Russian liquefied natural gas (LNG) are unlikely to impact Asian buyers, according to Reuters citing Kadri Simson, European Commissioner for Energy.

As part of a 14th package of sanctions on Russia over its war on Ukraine, the European Union proposed to ban re-loading services by EU facilities for transshipment of Russian LNG to third countries. This does not affect imports into the EU.

The EU would also ban new investments and the provision of goods, technology, and services by EU operators for the completion of LNG projects under construction such as Arctic LNG and Murmansk LNG.

“This will not impose problems for Asian consumers: LNG market now is a liquid market and it is possible to replace volumes even if Russia will not find alternative transport means,” Simson said.

Countries including Belgium, Germany, and France have asked the commission for assessments on whether the ban may hit the Russian economy more than the EU’s, according to diplomats.

Simson said that the commission has provided its member states with ‘all the necessary data’ that the proposal will not impact global markets significantly.

“It only means that Russia has to use alternative vessels to serve their third country customers that will be more expensive for Russia but otherwise it doesn’t withdraw volumes away from global markets,” she added.

Diplomats said they are racing to iron out the 14th package of sanctions before Hungary takes over the EU presidency in July. Hungarian Prime Minister Viktor Orban, who maintains ties with Russia’s President Vladimir Putin, has previously tried to block aid to Ukraine and restrictions on Moscow.

“I have no doubt that Hungary is thinking along very constructively especially because Hungary is a landlocked country and its own economy will not be impacted any way no way by transhipment decisions,” Simson said.