OPINION: The UK’s recent decision to ban all imports of Russian liquefied natural gas to the country could be a sign that Russian LNG shipments may be the next target for European sanctions.
With Russia reportedly preparing a new large-scale mobilisation in the Ukraine war and the closure of its borders, European nations may have little choice other than to extend restrictions beyond Russian oil and oil products.
Russia has reduced its pipeline supplies to the continent by two thirds from their pre-war levels, but authorities and companies such as Novatek and Gazprom expect to increase Russian LNG exports in the years to come.
Novatek, which has strong ties to Russian President Vladimir Putin, is pushing ahead with its Arctic LNG 2 project, despite the exit of Western contractors and suppliers.
The company is aiming to bring online the first train of the 20 million tonnes per annum project before the end of this year, with two more trains due to come into operation before 2025.
Gazprom’s Ruskhimalliance joint venture with privately held Rusgazdobycha, meanwhile, is driving ahead at the Baltic LNG project, which will offer 13 million tpa of LNG to European markets from 2026.
Russian LNG exports from Novatek-led projects in the second half of 2022 helped European efforts to meet their gas storage targets ahead of the critical winter period.
With a milder than expected winter so far contributing to lower than anticipated gas use, alongside European gas storage being well above the five-year average and gas prices at pre-war levels, there is little to prevent the continent's policymakers from targeting another of Russia’s hydrocarbon revenue streams.
While Russian oil and oil products can be sold domestically to support budget revenues, its LNG projects are all export-oriented.
Cutting Russian LNG out of global markets may turn out to be a quick and effective measure.
(This is an Upstream opinion article.)
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