The U.S. State Department has added Arctic LNG-2, the Russian liquefied natural gas (LNG) producer, to the State Treasury’s sanctions list. This massive Russian project, capable of producing approximately 27 billion cubic meters annually, is expected to begin shipments in the coming months. Currently, U.S. sanctions only apply to the Arctic LNG-2 project. At the same time, the leading Russian liquefied natural gas exporter, Yamal, continues to operate freely; this also includes its partnership with the French company TotalEnergies. However, this recent move by Washington sends a clear signal to its allies: there is no need to switch from Russian natural gas to Russian liquefied natural gas.
“There are only four mysterious lines in a Thursday press release published by the State Department”, notes the French economic magazine Les Échos, “but these lines can have far-reaching consequences for the global energy market, especially in Europe and Asia. Washington has imposed sanctions against Russia targeting individuals and assets “associated with Russian military aggression and other criminal activity”. However, European Union member states have not yet stopped importing Russian liquefied natural gas.
The Western press pointed out that this is the first case of Russian LNG projects falling under American sanctions lists. Until now, Moscow’s liquefied gas was exported worldwide, including Europe. “To compensate for the halt of Russian natural gas supplies, the European Union has sought to export liquefied gas, primarily from the United States and Qatar, but also from Russia,” wrote Les Échos. “In the first seven months of the year, Russian LNG imports to Europe increased by almost 40% compared to the same period in 2021, a year before the start of the full-scale war in Ukraine”, reports the French daily newspaper Le Monde. “From January to July this year, the European Union purchased 52% of Russia’s liquefied gas, and its market share soared. In 2022, the European Union bought only 49% of Russian volumes, while in 2021, this share was even lower, 39%.”
Today, Spain, Belgium, and France are the leading importers of Russian liquefied natural gas (LNG). Along with China and Japan, these European countries are among the top five largest consumers of Russian LNG in the world. According to the Institute for Energy Economics and Financial Analysis (IEEFA) estimates, in 2022, France imported LNG worth 5,4 billion euros from Russia.
Overall, according to the European Commission’s data, Russian gas still accounts for nearly 15% of the European Union’s consumption, with half of it being liquefied gas. While this dependence has significantly reduced (before the Russian invasion in February 2022, it was over 40%), Russian gas remains strategically important for European consumers. Washington maintains that the Arctic shouldn’t become a new route for Moscow to monetise its energy resources. At this point, the United States is not specifying the terms of the sanctions. Currently, European experts do not anticipate critical consequences of the American restrictions on EU markets. However, if the sanctions list is expanded to include the Russian Yamal project in the future, its impact will likely be more significant.
