May 24, 2024

The EU’s 14th sanctions package against Russia – how could it impact Russian LNG exports?

The European Commission has started extensive discussions on a new sanctions package that would target Russian LNG. Part of the package would encompass banning LNG transshipment/re-export activity at European ports. This blog post is a snapshot of Kpler Insight’s latest LNG spotlight report, which explores the effects these sanctions could have if they were to be implemented, focusing on the impact on transshipment operations and re-exports.

What does Kpler data tell us about Russian LNG export activity?

In 2023, Russia exported a total of 32.3 mt of LNG, making it the world’s fourth-largest exporter behind the US, Qatar and Australia. Around 51% of these exports were delivered to Europe, 48% to Asia, and 0.2% to the Americas. Conversely, Russian LNG made up 13% of imports in Europe and 6% of LNG imports in Asia. 

To optimise its limited fleet of Arc4 and Arc7 ice-class carriers, Russia is the only major exporter regularly undertaking transshipment operations – mostly using the LNG it produces from the Yamal and Portovaya plants. In 2023, a total of 21.4 mt of LNG was exported from both plants, with 16% of these volumes involved in ship-to-ship operations, while the remaining was directly shipped to importing countries. Among these transhipped volumes, most of the LNG was delivered to Asian buyers, including China, India, and Taiwan.

Key STS locations include the Murmansk Lightering zone near the Norwegian border, France’s Montoir and Belgium’s Zeebrugge terminals (see chart). There is also some Russian LNG that is re-exported of Zeebrugge, which would also be impacted by the sanctions. 

Yamal and Portovaya LNG exports via STS, by STS location (mt)


Source: Kpler

If implemented, what could be the likely impact?

Firstly, Kpler Insight believes it is unlikely these sanctions will pass in the first place, as opposition from certain countries in the EU bloc, such as Hungary, is to be expected. 

However, if they were enforced, this would remove the two main hubs that are currently in use – Montoir and Zeebrugge. This would leave Russia with the two locations within its territorial waters, Murmansk Lightering and Kaliningrad, or Russia could increase deliveries via the NSR during the summer months. Russia could also find new STS hubs, either in its own waters or in the Mediterranean Sea, locations which are explored extensively in the LNG spotlight report.

Such a move would change the logistics of these LNG flows, but not remove the volume from the market. The EU bloc will not be very much affected, and even the most impacted country (China) could easily source some of these volumes elsewhere. 

Ultimately, Kpler Insight believes Russia would continue to export its LNG, albeit with increasing logistical strain and at a higher operating cost. 

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