In December, Russia’s domestic prices for liquefied petroleum gas (LPG) fell by 50% following the implementation of a European Union ban on imports. The sanctions, which took effect on December 20, came one year after Poland, one of Russia’s largest LPG importers, proposed the measure. LPG, primarily used as fuel for vehicles, heating, and producing petrochemicals, has seen a sharp decline in price as a result.
In addition to this, the European Commission has introduced new sanctions targeting Russia’s liquefied natural gas (LNG) sector. As part of its 14th sanctions package against Russia, the EU has proposed measures that would prevent member countries from re-exporting Russian LNG. The plan also includes a ban on EU participation in future LNG projects in Russia. However, these sanctions would not directly block Russian LNG imports to the EU.
Similar to previous sanctions, the goal of the import ban is to disrupt Russia’s financial support for its war in Ukraine. While Russian LNG made up only 5% of the EU’s energy consumption in 2023, it still generated about $8 billion in revenue for the Kremlin. The proposed sanctions would also restrict the use of EU ports, financial services, and logistics for re-exporting Russian LNG. This could force Russia to alter its LNG export strategy, as it currently sends LNG to Asia via Europe, with major hubs in Spain, Belgium, and France.
According to Laura Page, a gas expert at Kpler data analytics, without the ability to transship through European ports, Russia may have to send its LNG on longer routes. She noted that Russia could also face logistical challenges, particularly from its Yamal LNG project, as its ice-class tankers may struggle to return quickly enough.
Russia is increasingly feeling the effects of these sanctions. The Centre for Research on Energy and Clean Air (CREA) reported a 17% increase in the discount on Urals crude oil in December, with the price gap widening to $6.01 per barrel compared to Brent crude. CREA estimates that Russia has lost around EUR 14.6 billion in revenues from its Urals crude exports due to ongoing sanctions.
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