- Yamal LNG Faces Disruptions as EU Blocks Transshipment to Asia.
- China’s LNG Supply at Risk Amid EU Sanctions on Russian Transshipment.
- Russia Seeks Alternatives as EU Ban Disrupts Yamal LNG Shipments.
The EU transhipment ban on Russian LNG, scheduled to become effective on March 27, 2025, may jeopardise winter deliveries from Russia’s Yamal LNG project to China and other markets in Asia. Industry experts note that the action, part of the EU’s 14th sanctions package endorsed in June 2024, directly addresses the trade streams of Yamal LNG, a giant Russian energy project in the Gydan Peninsula, reports S&P Global.
Effect on Yamal LNG and Asian Markets
Much of Yamal’s LNG is supplied to Europe but considerable volumes are transshipped through European ports for onward sale to China, the world’s largest importer of LNG. The move is alarming to China, which has strong interests in Yamal LNG in both supply contracts and ownership stakes. PetroChina has an existing 20-year, 3-million-mt/year LNG purchase agreement with Yamal LNG, entered into in 2014 on an ex-ship (DES) basis. China National Petroleum Corp. (CNPC) also has 20% ownership in Yamal LNG, and the Silk Road Fund has another 9.9% interest.
China’s LNG Supply Shift and Market Dynamics
The ban on transhipment could lead to more Yamal LNG remaining in Europe, reducing supply to China. Daisuke Harada, director of the Energy Business Unit at the Japan Organization for Metals and Energy Security, noted, “This measure clearly appeared to redirect the Chinese offtake portion of Yamal LNG (29.9%) toward demand within Europe.”
At the same time, he pointed out that China benefits from selling LNG to Europe, where market prices are higher and there are no additional transportation costs, rather than selling to the cheaper Asian market. “On the other hand, China is also influenced by the vector of selling in Europe, where market prices are higher and there are no transportation costs, rather than selling in the cheaper Asian market,” Harada said.
Seasonal Shipping Issues for Yamal LNG
Yamal LNG relies on seasonal Arctic shipping routes to access Asian markets. Between June and November, ARC7 ice-class LNG carriers can travel the Northern Sea Route (NSR) directly to Asia. But between December and May, these ships have to go west to European ports for transhipment onto regular LNG carriers, which then proceed to Asia.
These transshipped Yamal LNG cargoes are projected to constitute around 28% of Russia’s overall LNG exports to China, or around 2.22 million mt out of 7.81 million mt for the March 2024-March 2025 period, based on Commodity Insights data. For China, these transshipped LNG volumes represent around 3% of its overall LNG intake for the same period.
Russia’s Alternative Transshipment Options
With the EU transhipment prohibition imposed, Russia will have to find alternative routes, such as new transhipment centres or ship-to-ship (STS) transfers offshore, both of which would result in higher costs and logistical risks.
Lu Xiao, research director for China gas and LNG at Commodity Insights, explained, “Russia can deliver Yamal LNG to Asia via STS transfers when the NSR route is closed, ensuring its ability to fulfill long-term contracts with Asian buyers, although costs and operational time will rise.” Reports indicate that the Yamal LNG project resumed STS transfers near the port of Murmansk in late 2024 to free up ice-class tankers.
Some Asian buyers may explore strategies to mitigate the impact of the EU ban by reselling their contracted Yamal LNG cargoes in Europe and purchasing spot cargoes from other regions to replace the lost volumes. However, this strategy depends on Europe’s willingness to accept Russian spot LNG, which remains uncertain. A trade source commented, “It is more of a political issue than an economic one.”
Other Russian LNG Projects and Pipeline Gas Supply
In addition to Yamal LNG, Russia also provides China with gas through its Sakhalin-2 LNG project, exporting from the ice-free Prigorodnoye terminal. In the meantime, pipeline gas supply from Russia to China continues to be robust.
Since January 2025, Russia has become China’s biggest pipeline gas supplier by export value, replacing Turkmenistan. Gazprom has increased gas supplies via the Power of Siberia pipeline to its contractual limit since December 1, 2024, and to record-high levels by March 3, 2025. Russian pipeline gas imports are projected to reach or even surpass the design capacity of 38 Bcm/year in 2025, from about 30 Bcm in 2024.
China’s Resilience to Supply Disruptions
Despite potential disruptions from the EU ban, China’s diversified gas supply sources and reserves are expected to cushion any immediate impact. A trade source noted, “Even if Yamal’s winter shipments face delays, China’s diversified suppliers and domestic reserves are expected to cushion the impact.”
With Russia’s increasing pipeline exports and China’s ability to adjust its LNG procurement strategy, the long-term effects of the EU ban remain uncertain.
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Source: S&P Global
