EU sanctions target Russian gas for the first time, diplomats say

By Julia Payne

BRUSSELS (Reuters) -European Union countries agreed on a 14th package of sanctions against Russia over its war in Ukraine, diplomats said on Thursday, including their first restrictions on Russian gas.

The package bans re-exports of Russian liquefied natural gas (LNG) in EU waters but stops short of banning imports as the bloc did in 2022 for Russian seaborne oil. Some EU countries still import pipeline gas from Russia via Ukraine.

However, gas market experts say the measure will have little impact as trans-shipments of gas via EU ports to Asia represent only around 10% of total Russian LNG exports.

The package also sanctions three Russian LNG projects and includes a clause designed to allow Sweden and Finland to cancel Russian LNG contracts, diplomats said.

Belgium, which holds the rotating EU presidency until July 1, said on social media platform X that the package "maximises the impact of existing sanctions by closing loopholes".

"This hard-hitting package will further deny Russia access to key technologies. It will strip Russia of further energy revenues. And tackle (President Vladimir) Putin’s shadow fleet and shadow banking network abroad," European Commission President Ursula von der Leyen said on X.

Countries debated the new measures for over a month and ultimately watered down one of the Commission's proposals, aimed at preventing even more circumvention, at Germany's prompting.

The dropped measure would have forced subsidiaries of EU companies in third countries to contractually prohibit the re-exports of their goods to Russia. The EU is keen to stop the flow of dual-use technology such as washing machine chips that could be used by Russia for military purposes.

An EU diplomat said Germany had asked for an impact assessment, and the measure could be included at a later date.

The package also tightens measures against the shadow fleet moving Russian oil outside the price cap on Russian crude set by the Group of Seven (G7) nations. EU countries added tankers to the list of sanctioned entities as well as at least two Russian-owned ships moving military equipment from North Korea, diplomats said.

Moscow and Pyongyang have grown closer since Russia's February 2022 full-scale invasion of Ukraine. This week, the two countries agreed to provide immediate military assistance if either faces armed aggression in a pact reached after Russian President Vladimir Putin visited Pyongyang.

Overall, 47 new entities and 69 individuals were added to the EU sanctions list, bringing the total to 2,200. The package is expected to be formally approved when EU foreign ministers meet on Monday, diplomats said.

(Reporting by Julia Payne; editing by Kevin Liffey and Mark Heinrich)