Proposed EU sanctions on Russian liquified natural gas (LNG) would mark the first step toward the bloc's total phaseout of Russian natural gas by 2027, while further complicating Moscow's LNG expansion plans. But the European Union remains unlikely to significantly curb its imports of Russian gas until new global LNG supply comes online in 2026. According to media reports, the European Commission is drawing up plans to impose restrictions on Russian LNG as part of its 14th sanctions package against Moscow for its invasion of Ukraine. The restrictions will reportedly include a ban on transshipments from EU ports to third countries, along with sanctions on three Russian LNG projects — Arctic LNG 2, the UST Luga LNG terminal and the Murmansk plant — that are still in development. EU sanctions need unanimous approval by member states, which are set to discuss the proposal in early May. Two of Europe's largest consumers of natural gas, Germany and Italy, have indicated they would support the measures, but discussions remain at an early stage and other member states may still oppose the proposals.

• Italian Energy Minister Gilberto Pichetto Fratin and German Economy and Climate Minister Robert Habeck said their respective countries no longer need Russian natural gas for their energy security and would support Swedish Foreign Minister Tobias Billstrom's proposal to include Russian LNG in the next EU sanctions package against Russia.
• The proposed measures against the Russian LNG projects would likely include export restrictions on Western-made equipment and vessels used for the liquefaction and transport of LNG, as well as on other technologies, services or financing, adding to similar restrictions already imposed by the United Kingdom and the United States.

The European Union imposed a ban on coal and seaborne crude oil imports from Russia shortly after the start of the war in Ukraine, but the bloc has so far been unable to reach a consensus on extending its energy restrictions to natural gas. In early 2022, Russia severely reduced the natural gas it sends to Europe via pipelines, in retaliation for EU sanctions. This initially led to a severe energy crisis in the Continent that triggered rampant inflation, slowed economic growth and increased costs for Europe's industrial sector. However, natural gas supplies and prices have since largely stabilized thanks to a combination of policy interventions, supply diversification and demand destruction, as well as warmer-than-average winters over the past two years that further reduced gas demand. As a result, the share of natural gas EU countries imported from Russia via pipelines fell from above 40% of the total in 2021 to only 8% in 2023. However, EU imports of Russian LNG have increased by 40% over the same period due to an uptick in heavily discounted cargoes into EU ports, making Russia Europe's second-largest LNG supplier after the United States and taking the overall share of natural gas coming into the European Union from Russia to 15% as of now (down from 45% before the war). This has led several EU members, including Sweden, Finland and the Baltic States, to increase calls for an EU embargo on Russian LNG. While the European Union's precarious energy situation has so far kept natural gas outside the scope of its sanctions on Russia, the improving outlook means it now feels confident enough to start implementing at least some restrictions in pursuit of its broader goal to fully phase out Russian energy imports by 2027.

• The European Union was able to implement sanctions on imports of Russian coal and crude oil primarily because these can be more easily replaced in the global market compared with natural gas, which has a more significant role in the energy security of many EU countries. While it has been relatively easy to reroute supply chains and find alternative sources from other oil- and coal-exporting countries, breaking the bloc's dependency on natural gas supplies from Russia is significantly more complicated due to the extensive pipeline infrastructure directly linking Russia with Europe and the relatively scarce alternatives on the global LNG market in the short term. Disrupting this supply would also exacerbate the already severe impacts of Russia's own supply cutoffs. The European Union has thus undertaken a phased approach to weaning off Russian natural gas by building the necessary LNG import infrastructure (such as regasification terminals and storage facilities) and signing long-term contracts with alternative suppliers. 
• Before it invaded Ukraine in February 2022, Russia exported around 155 billion cubic meters (bcm) of pipeline gas and about 16 bcm of LNG to Europe, accounting for 40% of the European Union's total gas imports. Russia's pipeline gas exports to Europe, now limited to flows through two routes via Ukraine and Turkey, fell to 62 bcm in 2022 and to 25 bcm in 2023. Meanwhile, Russian LNG exports to Europe have actually grown since the start of the war, increasing to 22 bcm in 2023. 
• The European Union's total LNG imports increased by 70% to 170 bcm in 2022, totalling 134 bcm in 2023, making it the world's leading importer of the fuel (mostly from the United States, Russia and Qatar). LNG now accounts for about 42% of the European Union's total intake of natural gas, up from 20% in 2021. A switch to alternative sources of energy, diversification of supply and a reduction in overall gas consumption has further helped Europe drastically reduce its overall reliance on Russian gas. The bloc's natural gas storage facilities are now 60% full and well on track to hit its 90% target by the start of the next winter. Natural gas prices in Europe have decreased from the August 2022 record high of over 300 euros per megawatt hour in August 2022 to below 30 euros per megawatt hour as of April 30.

The proposed restrictions would have a limited impact on the European Union's natural gas supplies, as they would not ban purchases of Russian LNG used in the bloc. The sanctions against Russian LNG projects would, however, further complicate Moscow's efforts to increase LNG production. Under the proposal, EU member states would only be prohibited from importing cargoes they plan to re-export to countries outside the European Union, which only represent about a quarter of total Russian LNG imports into the bloc. Individual member states like France, Spain and Belgium (which together account for nearly 90% of the European Union's total LNG imports) are unlikely to completely stop importing discounted Russian LNG at their ports until an EU-wide import ban forces them to. But the bloc is unlikely to impose such a total embargo anytime soon due to the continued lack of consensus among member states, as European governments remain under pressure to keep energy supplies and prices under control, which means the bloc will likely continue to import Russian LNG until significant new LNG supply comes online from Qatar and the United States in 2026. Against this backdrop, the European Union will likely meet its planned phaseout of Russian natural gas by 2027 only through gradual steps to avoid new energy crises. Meanwhile, the proposed EU restrictions on the three Russian LNG projects in the Baltic and Arctic would further complicate Russia's LNG expansion plans by making it all the more difficult to secure the vessels, technology and financing needed to complete and operate those projects. Indeed, the new EU sanctions will likely include measures that strengthen existing U.S. and U.K. restrictions on supplies of Western-made equipment for Russian LNG projects, which would only further impede Russia's ability to hit its LNG production targets. 

• According to estimates by the Centre for Research on Energy and Clean Air, 22% of the Russian LNG imported by the European Union is not consumed in the bloc but rather handled at ports in Belgium, France and Spain and then re-exported to countries elsewhere, mostly in Asia.
• Similarly to LNG imports, the EU member states that continue to rely heavily on the bloc's now-greatly-reduced Russian gas deliveries via pipeline are either unwilling to break long-term supply contracts with Russia (like Hungary) or unable to legally do so without an EU-wide ban (like Austria).
• According to a forecast it released in 2023, the Russian government expects the country's LNG projects to produce between 44 and 39 million tonnes of LNG by 2026. However, the Norway-based energy research company Rystad now expects Russian LNG projects to only produce 36.3 million tonnes by 2026.