Europe is on the verge of an important choice: the ban on Russian LNG as a step towards energy security
After the election of Donald Trump for a second presidential term, Europe may lose the opportunity to introduce new sanctions against Russian energy resources. According to the agency Bloomberg, the administration of US President Donald Trump is preparing to present a plan to end the war in Ukraine at the Munich Security Conference, which will take place on February 14-16. According to the agency, the plan may involve freezing the conflict without officially recognizing Russian jurisdiction over the occupied territories, as well as providing Ukraine with security guarantees to prevent repeated aggression by Russia. In addition, the possibility of gradual lifting of sanctions against Russia in exchange for achieving peace is being discussed. Even if this is just a guess, the geopolitical situation can quickly turn energy constraints into a tool in the global political game, where every move has significant strategic importance.
Western sanctions have reached their limits
After three years of full-scale war, the West’s sanctions policy towards Russia is approaching the C-hour, after which drastic changes are expected. According to reports, Trump’s new special envoy to Ukraine, Keith Kellogg, has developed a strategy that involves gradually easing sanctions in order to negotiate. This could undermine the pressure that the West, particularly the European Union, has tried to maintain for so long. However, regardless of the attitude of Europe or Ukraine to this strategy, the reality remains the same: Trump will determine the terms of the game. Therefore, Europe will have to respond to the circumstances, and not focus on its own expectations.
One way or another, even regardless of Trump’s rhetoric, sanctions against Russia have apparently already reached their maximum point. By data analytical portal of the Center for International Security, Russia is currently subject to approximately 20,000 Western restrictions, but the real impact is mainly financial and energy sanctions. Against this background, the problem of importing Russian liquefied natural gas (LNG) to Europe is particularly pronounced. These supplies not only provide the Kremlin with finances to continue the war against Ukraine, but also support Russian acts of sabotage and attacks on European territory.
What should Europe do?
Given the rapid collapse of the geopolitical space for independent decisions, the EU must act more decisively now. In particular, he should refuse to import Russian LNG. European countries should actively diversify their sources of gas supply, increasing the share of purchases from the USA, Qatar and other reliable partners. Obviously, it would be correct to build a joint energy strategy. It is worth coordinating the actions of all EU member states to reduce dependence on Russian energy resources and introduce new mechanisms for maintaining energy security. It is also necessary to consider long-term alternatives: investments in renewable energy sources will help reduce Russia’s influence on the European gas market.
As point out analysts of the Kyiv Independent publication, if the information about the 100-day or six-month window for negotiations is true, Europe may soon lose the chance for a complete ban on Russian LNG. Once the negotiation process begins, the Trump administration is unlikely to support the imposition of tough new sanctions, as this could complicate the negotiations themselves.
Under the pressure of more than 20 thousand Western sanctions
As already mentioned, as of December 2024, Russia is under the influence of more than 20 thousand Western sanctionsaimed at limiting its economic and military capabilities. Among these restrictions, financial and energy sanctions have the most tangible impact.
Infographic: IA “FACT”
Financial restrictions include the disconnection of Russian banks from the international SWIFT system, the freezing of assets and a ban on transactions with Russian financial institutions. These measures made it much more difficult for Russia to access international financial markets and limited the possibilities of financing military operations.
The key source of income for the Russian economy is the energy sector. By data research by the KSE Institute, from December 2022 to June 2024, Russia lost $78.5 billion in oil exports compared to the scenario without the introduction of sanctions. Monthly losses peaked at $8.6 billion in January 2023 following the introduction of embargoes and price restrictions by the EU. However, losses have stabilized at $2.8 billion per month since mid-2023.
Despite these losses, Russia took measures to adapt to the new conditions. In particular, approximately $8.5 billion was invested in the development of the tanker fleet, which is not subject to sanctions. As of the first quarter of 2024, the shadow fleet numbered 435 ships.
As you know, the European Union continues increase sanctions pressure on Russia. In December 2024, the 15th package of sanctions was adopted, which includes restrictions against 54 individuals and 30 organizations responsible for actions that undermine the territorial integrity of Ukraine. Sanctions also target the shadow fleet, which is used to circumvent restrictions on oil exports.
Thus, although Russia is subject to a significant number of sanctions, financial and energy restrictions have the most significant impact on its economy.
Stable LNG export despite sanctions
Despite sanctions pressure, Russia’s revenue stream from LNG exports to the European Union will remain stable in 2024 and 2025. According to the agency Bloomberg, the European Union imported 15.5 million tons of Russian LNG in 2024, which was the highest figure since 2019. European countries are still not ready to impose an embargo on this type of Russian gas, which continues to provide Russia with substantial profits. In order to increase budget revenues, the Russian government introduced an increase in the tax rate on profits from LNG production from 20% to 32% for the period 2023-2025. These funds will most likely be used to finance military needs.
According to Russian sources, in 2022 more than 76% of Yamal LNG was delivered to the EU. In the first half of 2023, the volume of liquefied gas exports to Europe increased by 40% compared to the same period in 2021. Although pipeline gas remains the dominant source of supply, the sale of LNG to Russia in 2023 brought in about 5.29 billion euros.
In June 2024, the EU adopted the 14th package of sanctions, but it did not include a full embargo on the import of Russian LNG. Instead, a ban on the resale and transshipment of Russian liquefied natural gas in European ports was introduced, as well as restrictions on investment and the supply of technology to complete the construction of LNG terminals in the Arctic and Baltic regions. Due to an adaptation period of nine months, the effectiveness of these restrictions will only become noticeable after March 2025.
At the same time, the absence of strict restrictions on the import of LNG allows Russia to receive a stable flow of foreign exchange earnings, which undermines Europe’s sanctions efforts and continues to finance aggression in Ukraine.
If Europe does not apply its “window of opportunity” now, it risks losing control over energy policy, making its own economy hostage to Russian blackmail and the geopolitical games of the new Trump administration. Some may argue that imposing a ban on Russian LNG now has little effect, as it can be lifted during peace negotiations. However, this view ignores two important aspects. First, the introduction of the ban at this stage will significantly strengthen Ukraine’s position in the negotiations. Secondly, such a ban will accelerate the process of diversification of energy supplies in Europe, which will contribute to the development of new trade models, which will be difficult and irrational to cancel in the future.
Consequently, the Trump Administration may try to persuade Europe to impose its own sanctions, even to the detriment of its interests. This is reflected in the pressure on the EU to ease sanctions, in particular by capping oil prices instead of a complete ban on trade. Europe must act decisively to preserve its autonomy and strategic interests. A ban on the import of Russian LNG could be an important step in strengthening sanctions and a signal of unity. The European Commission can create a fund to support member states in the transition from Russian gas and the development of renewable energy.
