The Russian invasion of Ukraine is starting to have a serious impact on Vladimir Putin’s regime. In recent days, reports have revealed that the European Union (EU) is taking stronger action against Russia. While previous Western sanctions targeted Russia’s economy and military, loopholes allowed Moscow to bypass them. In 2024, Russia saw record revenue from hydrocarbon and metals exports, including increased LNG shipments to the EU. Although gas pipeline volumes to Europe have dropped, especially after Russia ended a major transit deal with Ukraine, Russian LNG continued to flow largely unaffected.
Now, however, change seems to be on the horizon. The re-election of Donald Trump as U.S. president, alongside a global LNG production boom, has given Brussels the political will to intensify efforts against Putin’s regime. Following U.S. and UK sanctions targeting Russia’s “dark fleet” (which reduced Moscow’s maritime oil export capacity by 25-40%), Russian LNG exports are now facing increased scrutiny.
As is typical, the EU is adopting a cautious approach. Bloomberg reports that diplomats in Brussels are considering gradually reducing the EU’s dependence on Russian LNG. In addition, they are discussing new sanctions on Russian aluminum imports, further restrictions on Russian banks and oil tankers, and expanding military sanctions.
Putin’s government is already feeling economic strain, with inflation at 9% and interest rates at 21%. Despite official GDP growth figures, Russia’s economy is showing signs of weakness, particularly due to shrinking foreign currency reserves. While demand for Russian oil and gas remains strong in Asian markets, price pressures from China and India are limiting Russia’s ability to charge premium prices. Russia has placed great emphasis on LNG exports, but a full EU phase-out of Russian LNG could freeze many of these projects.
These actions are expected to be part of a new 16th sanctions package by the EU. However, political challenges within the EU could slow implementation. Countries like Hungary, Slovenia, and Slovakia are likely to oppose swift action. Putin also understands the slow pace of EU decision-making and the potential risks of a U.S.-EU trade conflict under Trump’s leadership, especially if the U.S. pressures EU members to import more American LNG.
Compounding the situation is the EU’s new methane regulations, which were introduced in August 2024. Starting in May 2025, these regulations will require detailed methane data for all hydrocarbon imports, with fines of up to 20% of annual turnover for non-compliance. These rules could deter LNG suppliers, including Qatar, from exporting to the EU. Qatar has warned that strict enforcement could disrupt its LNG exports to Europe due to the difficulty of meeting methane data requirements.
Despite the talk of sanctions, loopholes persist. EU-based shipyards are still repairing Russian ice-class tankers used to export LNG through the Arctic. Sources report that shipyards in France and Denmark continue to maintain most of Russia’s Arc7 tankers, which are essential for Yamal LNG operations, from which the bulk of Russian LNG is exported.
While Brussels’ efforts to weaken Russia’s war economy are commendable, their effectiveness is still limited. To effectively challenge Putin’s strategy, the EU needs stricter sanctions and tighter enforcement. However, balancing these measures with energy security and environmental commitments remains a significant challenge for the bloc.
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