Fresh US sanctions on two small Russian LNG plants would only have a small impact on European gas supply but raise some risks, analysts said.
The US on Friday announced sanctions against Gazprom’s Portovaya LNG and Novatek’s Vysotsk LNG – which in 2024 exported 3.1bcm of LNG in total, almost all of it delivered to Europe and Turkey.
Some LNG vessels were also sanctioned, although larger LNG facilities were spared, such as the 17.4m tonnes Yamal LNG and 10.4m tonnes Sakhalin II LNG terminals.
“While the LNG sanctions don’t impact European markets for now, it’s a change in risk for Europe as now active LNG projects are being targeted,” said Florence Schmit, energy strategist at Rabobank.
Targeting the relatively small Russian LNG facilities appeared to be a “middle ground” and to not threaten European and Japanese supplies, said Anne-Sophie Corbeau, global research scholar at the Centre on Global Energy Policy at Columbia University.
“No more Yamal LNG would have significant impact on gas prices, while the Japanese would be very upset about Sakhalin,” she said.
Awaiting Trump
Russia earns billions every year from its LNG exports, which hit a historic record of 46bcm in 2024, according to Kpler data.
The EU already prohibits the import of coal and seaborne crude oil and refined oil products from Russia. However, Brussels has stopped short of imposing direct sanctions on gas and LNG imports due to the bloc’s reliance on the fuel.
Analysts are now awaiting what the US president-elect, Donald Trump, will do next.
US sanctions have so far partially disrupted LNG operations of Arctic LNG 2, a new LNG facility that will likely remain idled until next summer after failing to deliver a single cargo last year.
Analysts reckon that Trump could tighten the LNG noose on Russia to force Europe to buy more US LNG or he could use sanctions relief as a bargaining chip in any peace negotiations between Russia and Ukraine.
The fresh LNG sanctions are “a very shrewd move” by the outgoing Biden administration, said Tom Marzec-Manser, an independent gas analyst.
“A decisive act, which Trump may have been planning himself to look strong [but] now a card Trump can’t play himself. And if Trump repeals early, will he not look soft on Russia?”
Nevertheless, he said Trump could still use the new sanctions “in the bargaining in a war-end scenario – more taps that can be opened in return for peace, sort of thing”.
Trump is also under pressure from US LNG producers to sanction existing Russian LNG output to increase their share of the global market, analyst say.
“The only way Europe will buy more US gas in the short term is if sanctions on Russian LNG actually become tighter, so I think Trump might not as be as quick as to just rework some of these sanctions,” said Schmit.
Source: Andres CALA
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