EU Bans Russian LNG Transshipment, But Russia Finds A New Way

The European Union’s ban on transshipment of Russian liquefied natural gas (LNG) has officially come into effect as of March 26, 2025.

The measure, part of the EU’s 14th package of sanctions against Russia, aims to limit Moscow’s revenue from LNG exports, which have been helping fund its war in Ukraine.

Under the new rules, EU ports can no longer provide transshipment services for Russian LNG destined for third countries.

The ban also prohibits European companies from offering technical support, brokerage services, financing, or any form of assistance for transshipment operations.

Despite this move, a full ban on Russian LNG imports remains off the table, as several EU nations still rely on Russian gas for their energy needs.

In June 2024, the EU adopted the transshipment ban, but companies with contracts signed before before June 25, 2024, were granted a moratorium until March 26, 2025 to adjust.

The sanctions also include restrictions on investments in Russia’s Arctic LNG 2 and Murmansk LNG projects and a ban on using Russia’s SPFS payment system.

Even with sanctions, EU nations continued purchasing large volumes of Russian LNG. In 2024, Russian LNG deliveries to the EU reached a record 16.65 million tonnes, worth more than $8 billion.

Most of these shipments came from the Arctic Yamal LNG project, with smaller volumes originating from the Portovaya and Cryogas Vysotsk LNG terminals in the Baltic Sea.

Before the ban, Russian LNG frequently passed through key European hubs like Zeebrugge in Belgium and Montoir in France.

In 2024, 3.3 million tonnes of LNG were transshipped at these terminals, 2.5 million tonnes at Zeebrugge and the rest at Montoir.

Transshipment allowed Russia to efficiently use its Arc7 ice-class LNG carriers, which are specifically built for Arctic conditions.

About 20% of Russian LNG exports through European ports have been cut off. However, European nations can still import Russian LNG directly for their own energy needs, meaning the ban only targets shipments intended for non-EU markets.

But Russia has already found an alternative. Energy company Novatek, the majority owner of Yamal LNG, has been shifting operations to Kildin Island in the Murmansk region for ship to ship (LNG) transfers.

Kildin Island previously handled around a dozen transshipments per year, but that number has surged. By the end of 2024, Kildin saw three LNG transfers in November and four more in December and January 2025.

By March 2025, the number of STS operations had already reached 11, and analysts predict that this figure could double or triple by year end.

These ship to ship transfers, which take around 36 hours to complete, allow Russia to keep exporting LNG without relying on EU ports.

Novatek has expanded its LNG fleet to support these transfers, receiving three new vessels from South Korean shipbuilder Hanwha, ordered by Mitsui OSK Lines in 2021. Another ship will soon join the fleet.

The four North-series LNG carriers, North Moon, North Ocean, North Light, and North Valley, are now under Novatek’s control through charter agreements.

These ships are already transporting LNG from Kildin to Asia. In mid-February and late-February, North Light and North Ocean loaded LNG during STS transfers, while North Moon delivered LNG to Dalian, China, in mid-March.

According to Kpler, a data analytics firm, if Russia can’t rely on European transshipment hubs, it may have to send its ice-class LNG tankers on longer routes.

This could slow down operations and reduce the number of shipments Yamal LNG can deliver.

The Financial Times recently reported that a former executive from Nord Stream 2’s parent company has proposed reviving the pipeline. The plan suggests that US businesses could purchase Nord Stream 2 and act as intermediaries, making the gas supply appear more secure.

However, analysts, including StanChart, have pointed out that such a plan would require approvals from multiple jurisdictions, and adding US business involvement may not necessarily improve supply reliability.

References: USM, Oil Price

Source: Maritime Shipping News