Russian gas cargoes to remain exempt as EU nears new sanctions deal

The European Union is nearing an agreement on a new package of sanctions against Russia, which notably includes an exemption allowing Russian liquefied natural gas (LNG) cargoes to be shipped to third countries. This decision comes after intense negotiations and Greek opposition to a full ban, aiming to protect its substantial shipping industry.

The deadlock over the LNG shipping ban had delayed the entire sanctions package, particularly a crucial measure to freeze the price cap on Russian oil at $44.10 per barrel. Without an agreement, the cap would have risen to approximately $58 per barrel, potentially generating an additional $14 per barrel for Moscow. The proposed compromise includes a temporary extension for the existing oil price cap to ensure it remains in place while the LNG issue is resolved.

Greece, supported by Malta and Cyprus, has been a key opponent of the ban on shipping Russian LNG to third countries. Its Dynagas shipping company operates specialized ice-ready vessels that transport Russian LNG from Arctic terminals. Athens argued that a ban would simply lead these vessels to re-register under flags of countries outside EU oversight, ultimately undermining the effectiveness of the sanctions and harming the EU's maritime sector without significantly impacting Russia's revenue. The current proposal suggests allowing EU companies to export Russian LNG to third countries until January 2029, alongside a ban on new contracts for such shipments.

The discussions highlight a growing challenge within the EU to maintain unanimous support for new sanctions, as member states increasingly face conflicts between their economic interests and the broader goal of pressuring Russia. This particular situation underscores the influence of specific national industries, such as Greece's powerful shipping sector, on EU policy decisions. While the overall package aims to further restrict Russia's access to funds, the compromise on LNG shipping demonstrates the complexities involved in achieving consensus among the 27 member states.