COMMODITIES 2025: EU ban on Russian LNG transshipment to take effect amid rising imports

This is part of the COMMODITIES 2025 series where our reporters bring to you key themes that will drive commodities markets in 2025.

EU measures to stifle Moscow's war in Ukraine now also include sanctions aimed at Russia's LNG export capabilities, part of the bloc's wider aim to completely end Russian fossil fuel imports by 2027.

The 14th sanctions package, adopted in June, sought to prohibit the supply of goods, technology and services to LNG projects under construction in Russia.

The package also prohibited the transshipment of Russian LNG through EU ports from March alongside a ban on the import of Russian LNG into specific terminals not connected to the EU gas pipeline network.

In May, the EU also adopted a new regulation as part of the gas decarbonization package, allowing member states to restrict Russian gas and LNG supplies at the national level.

Russian LNG still accounts for a sizable portion of the EU's gas imports.

Limiting the onward transit of cargoes that typically make their way to Asia via transshipment or ship-to-ship transfers could see more Russian LNG absorbed into the EU gas network.

What effect the transshipment ban would have on European imports of Russian LNG remains unclear amid the absence of any outright ban on Russian LNG imports, according to market sources.

Russian LNG is still finding homes in parts of Europe where it has been a rare visitor recently.

On Dec. 17, a cargo of Russian LNG(opens in a new tab) arrived at Italy's OLT Toscana floating LNG terminal, marking the country's first delivery of Russian LNG since March 2023.

Commenting on the cargo delivery, an OLT spokesperson stressed there were "no sanctions in Europe banning the import of LNG or gas from Russia."

Analysts expect the transshipment ban to be felt more in Asia.

"[The ban] shouldn't have any effect on European LNG imports," a Europe-based LNG trading analyst said, adding: "It limits deliveries to Asia."

Europe's appetite for LNG remains strong, against a backdrop of growing import infrastructure and a likely halt in pipeline deliveries from Russia via Ukraine from 2025.

A proliferation of longer-term LNG contracts being signed by European companies and a deepening presence of LNG portfolio entities have seen a more dynamic LNG trade emerge across Europe.

"The European market has changed a lot in the last three years, particularly due to FSRUs," an LNG trader said.

"In previous years, a cargo might be nominated to reach a terminal in three weeks. It would typically arrive on time, with no diversions. Today, it can change at the last minute."

The EU imported nearly 82.7 million mt of LNG in 2024, almost half of which was sourced from the US, according to S&P Global Commodity Insights data.

Of the total, the EU imported some 14.9 million mt of Russian LNG in 2024, more than the 13.9 million mt sourced in 2023, the data showed.

Spot LNG import prices for delivery into Europe have remained volatile in recent weeks, driven by supply-side uncertainties.

Platts, part of Commodity Insights, assessed the spot LNG DES Northwest Europe Marker for February at $13.732/MMBtu on Dec. 23, up 4.35% on the day.

Changing dynamics

LNG transshipments in Europe have been predominantly concentrated at terminals in Northwest Europe, namely the Fluxys-operated Zeebrugge LNG terminal in Belgium, and the Elengy-operated Montoir-de-Bretagne facility in France.

In November, both Fluxys and Elengy announced compliance with EU sanctions on Russian LNG, with Fluxys stating it had changed its operational rules accordingly and Elengy noting it had implemented "necessary measures" to ensure adherence to sanctions as of March 2025.

"LNG transshipments are a different product, and less straightforward," an LNG trader familiar with transshipments told Commodity Insights.

"There's the overall capacity cost, plus relative costs determined by the usage. In the case of Russian LNG, those usage rates are likely to decline considering the ban."

In September, Fluxys said it was "extremely difficult" to anticipate future economic repercussions of the Russia-Ukraine war.

It said the EU's implementation of sanctions from March would affect a "limited segment" of the services included in long-term contracts active at the Zeebrugge terminal.

The contractual response from customers that had reserved reloading and regasification services for Russian LNG was as yet unclear, as it was "too soon" to determine the financial impact, it added.

The operator highlighted LNG terminalling was regulated, and its regulatory framework provided "certain room for manoeuvre in the event of revenue shortfall."

Long-term sales of additional LNG unloading slots would also create a buffer, Fluxys added, amid market interest in LNG capacity as soon as it becomes available.

Russian LNG industry

The Russian LNG industry expects US and European officials to do their best to completely push Russian LNG out of the European market, the press office of the Russian LNG Association told Commodity Insights Dec. 11.

New capacities slated to be launched in the US and Qatar in the next two years will replace Russian LNG in the EU, it said.

"The transshipment ban is only the first step of our unfriendly competitors in this direction," the association said. "Naturally, Russian LNG exports to Europe will decline and, likely, come to a halt."

The EU's 15th sanctions package, which was approved by member states on Dec. 16, sought to further disrupt the operation of Russia's shadow fleet across the energy sector, with the European Council saying the measures aimed to increase the cost of operating such fleets.

The EU also added the LNG carrier Christophe de Margerie to its Russian sanctions list as part of the 15th package.

The Christophe de Margerie, with IMO number 9737187, was the first LNG tanker to load a cargo from the Yamal LNG plant in December 2017 and is regularly used to ship LNG from the 17.4 million mt/year facility.