The European Union is facing a significant roadblock in approving its 21st package of sanctions against Russia, primarily due to Greece's opposition to proposed restrictions on Russian liquefied natural gas (LNG) shipments. Greece, home to the world's largest merchant fleet, is insisting on an exemption to allow its shipping companies to continue transporting Russian LNG to non-EU clients globally. This stance has drawn sharp criticism from other member states, with one diplomat calling it "shameless," as it endangers key elements of the new sanctions, particularly the automatic adjustment of the price cap on Russian oil.
The core of the dispute revolves around the EU's ban on Russian LNG, set to take full effect in 2027, which would prohibit the purchase, import, or transfer of Russian LNG. Greek officials argue that a full ban on transporting LNG would be counterproductive, stating that banning transport would be "all pain, no gain" because Moscow could find other transporters, such as China. They also highlight that companies like Dynagas, a Greek firm specializing in sub-zero shipping and heavily invested in long-term contracts with Russia's Yamal LNG facility until 2065, face significant financial repercussions, including potential debt defaults and rendering their icebreakers useless, if the ban is implemented without an exemption.
The Greek blockage has, in turn, stalled negotiations on the oil price cap. The cap, currently set at $44.10 per barrel and designed to be 15% below the average market price of Russian Urals crude, is supposed to be adjusted every six months. However, due to rising global fuel prices, partly fueled by the Iran conflict, the next automatic adjustment would increase the cap to $58 per barrel. This would provide Russia with more revenue, undermining the sanctions' effectiveness and creating a strategic advantage for the Kremlin. The EU has delayed the review of this cap until July 23 to allow for more time to reach an agreement on the broader package. Multiple workarounds are being discussed, including a 24-month transition period for LNG restrictions, allowing existing LNG contracts to proceed, or even abandoning the LNG measure entirely to salvage the rest of the sanctions package.
