President of the European Commission
Ursula Von der Leyen
European Commissioner for Energy
Kadri Simson
European Commissioner for
Financial Stability, Financial Services and Capital Markets Union
Mairead McGuinness
International Special Envoy
for the Implementation of EU Sanctions
David O’Sullivan
25 July 2023
Dear Ms. Von der Leyen, Ms. Simson, Ms. McGuinness, Mr. O’Sullivan,
We, the undersigned Ukrainian civil society organizations, call on the European Commission to introduce embargo on Russian liquefied natural gas (LNG), liquefied petroleum gas (LPG) and secondary sanctions on technologies and services associated with LNG and LPG infrastructure development in the 12th package of EU sanctions on Russia.
On June 20 the European Union approved the long-awaited 11th package of sanctions against Russia, while omitting the embargo on Russian LNG or even any mention of import restrictions on it.
At the beginning of July 2023 our President Volodymyr Zelenskyi called on EU member states to immediately start working on the 12th sanctions package. We believe that a full ban on Russian LNG should become part of it and has the potential to dramatically reduce Russian economic ability to wage war on Ukraine.
European countries boosted LNG imports by 60% in 2022 to make up for declining pipeline gas shipments from Russia. In the first quarter of 2023, imports of Russian liquefied natural gas to the EU were the highest in the last three years. In January-May 2023, LNG arrivals are about 56.2 bcm – 7% more than in the same period in 2022. The largest share of Russian LNG is imported through Spanish ports, while Belgian, Dutch and French ports account for most of the remaining volumes, making up 18% of Spanish gas supply, 15% of French supply and 10% of Belgian supply respectively. The most significant role is played by Yamal LNG supplies to Iberian peninsula. Yamal LNG’s 2022 net profit under Russian Accounting Standards was RUB 840.2 billion, compared with RUB 400.3 billion a year earlier. Revenues also almost doubled to RUB 1.1 trillion (up 96%).
According to data from the European Network of Transmission System Operators (ENTSO-G), LNG is the largest source of gas in Europe this year with a 35% share. In second place with a 26% share are supplies from the North Sea (mainly Norwegian gas), and in third place with 12% is the use of gas from EU underground storage facilities.
According to official statements published on 9 March 2023, Russia intends to almost triple its LNG export capacity to 100 million tonnes per year by 2030 from the current 35 million tonnes per year. The key among them is Arctic LNG 2. This project aims to transport and sell more Russian gas to international markets and could double the export capacity of Novatek, Russia’s largest private gas producer.
At the same time the issue of LPG (liquefied petroleum gas) supply remains beyond any discussion and almost outside politics. The EU has not yet imposed sanctions against Russian LPG, although Europe is the main market for russian domestic producers. The EU accounted for about 70% of Russian LPG exports in 2022, despite the cessation of deliveries to Germany, the Netherlands and Finland.
In 2022 Russia’s sales of LPG to the EU amounted to about 1.1 billion euros. According to an analysis by Forum Energii the vast majority of this sum, about two-thirds, went to Russia from Poland. Since Russia’s invasion of Ukraine in February 2022, about 700 million euros have flowed from Poland to pay for Russian LPG, while the rest of Europe spent about €400 million.
Poland and the Netherlands remain the main LPG consignees – shipments to these countries increased both in 2022 and in the first quarter of 2023. Shipments to Latvia, Uzbekistan, Azerbaijan, Afghanistan and China also increased significantly. This made it possible to compensate for the decline in shipments to Finland and Belarus.
Several LPG terminals in the Far East are in the final stages of construction – which result that Irkutsk Oil Company, which is building the new Ust-Kut GPP, and Gazprom Export, with its Amur GPP, will be able to redirect LPG to APR countries previously inaccessible due to expensive logistics. At the same time, private companies – Lukoil, Sibur and small traders – will maintain their presence in the European markets. As a result, we will see a strict division of the market into East and West, as well as export territories between the largest producers.
As we can see, the absence of the embargo on Russian LNG and LPG opens up additional opportunities for Russia to fill the budget, and, accordingly, to continue an active war against Ukraine.
We urge you to consider recommendations of the Energy and Utilities Committee of Verkhovna Rada of Ukraine regarding secondary sanctions on companies providing technology and services to help Russia export LNG and implement them in the 12th sanctions package.
Contribution of international companies to the construction of the Arctic LNG-2 could unlock extraction at new gas fields in Russia – set fuse to ‘methane bombs’ and put the 1.5°C Paris Agreement climate target off reach. As the world is inching towards catastrophic climate change, unlocking production from new gas fields in Russia and further gas exploration in the Arctic could push the world off the cliff.
In this context we cannot agree with the option of the EU’s continued imports of Russian LNG and LPG. We point to the fact that both Russia’s export revenues and production volumes must decline and international sanctions must work towards dismantling the Russian fossil fuel industry, not keeping it afloat. We call for implementing the LNG/LPG embargo against Russia and closing all sanctions loopholes with the consistent aim of keeping Russian oil and gas in the ground permanently in line with the globally agreed goal of limiting global heating to 1.5°C.
Today Russia and its deranged plans of fossil fuel industry expansion are posing a deadly threat to the world. A 2019 study by the US National Energy Technology Laboratory found that the use of imported Russian gas emits more greenhouse gasses than European coal which has been mined domestically.
In the view of above mentioned considerations, we urge the European Union to introduce 12th package of sanctions in which:
– expand the scope of EU embargo on Russian fossil fuels to include LNG and LPG, alongside oil, oil products and coal;
– introduce restrictions on the investments and export restrictions on all software, technology and equipment used for the development, production and rehabilitation of existing LNG projects, including Arctic LNG-2;
– restrict insurance and shipment services for Russian LNG and LPG cargoes;
– prohibit transhipment of Russian LNG and LPG in ports of European countries.
We also call on you to advocate through leadership dialogues with national governments of the EU member states ending all purchases of Russian LNG, which provides finance to Putin’s warchest, as well as to cooperate with the US and G7 governments to establish global price cap on Russian LNG to prevent the Kremlin from receiving revenues at world markets.
We are ready to communicate, support and mainstream related policies and facilitate interaction of all actors working on solutions for real energy security of Ukraine and Europe, transition to clean energy and countering Russia’s energy terror. We look forward to cooperating with the European Commission and EU institutions to make this happen.
Signatories:
- Razom We Stand
- Coalition of NGOs and municipalities “Energy Transition”
- Ukrainian Climate Network
- NGO “Ecoclub”
- NGO “Ukrainian Nature Conservation Group”
- NGO Center for Environmental Initiatives “Ecoaction”
- NGO “Center for international cooperation and project implementation”
- NGO “Plato”
- NGO “Social Initiative “City of the Sun”
- NGO “Danube-Carpathian Programme”
- NGO Black Sea Women’s Club
- NGO Zero Waste Society
- ICO “Environment – People – Law”
- NGO “Khmelnytskyi Energy Cluster”
- NGO “Save Dnipro”
- NGO “Office for the Environment”
- NGO “Ecoltava”
- NGO “Dixi Group