Greek dispute over Russian LNG delivers blow to EU's greater sanctions regime

Greece's resistance to the European Union's latest sanctions package against Russia, driven by its demand for changes to a planned ban on the transport of Russian liquefied natural gas (LNG), is beginning to jeopardize other aspects of the bloc's wider punitive campaign aimed at limiting Moscow's ability to finance the war in Ukraine.

Athens is seeking an exemption from the EU-wide measure, scheduled to take full effect on January 1, 2027, as highlighted in a Euronews article, arguing that prohibiting the shipping of Russian LNG to non-EU destinations would hurt European maritime interests without significantly reducing Russia's energy revenues.

Under the ban agreed last year, the EU will prohibit the "purchase, import or transfer, directly or indirectly," of LNG that "originates in Russia or is exported from Russia."

Greece is now pressing to amend the measure so that European shipping companies would still be allowed to transport Russian LNG to customers outside the European Union. While Athens has no interest in importing Russian LNG for domestic consumption, it wants to preserve business opportunities for its globally competitive shipping industry.

Several other member states oppose reopening the agreement, noting that the measure received unanimous backing when it was approved last October.

Shipping industry concerns

At the center of the dispute is Dynagas, a Greek shipping company specializing in Arctic LNG transport and owned by billionaire George Prokopiou, who also controls another company involved in transporting Russian seaborne oil.

Dynagas and one of its subsidiaries have chartered 11 LNG carriers — including seven Arctic-class icebreakers — to the Yamal LNG project, Russia's largest liquefied natural gas production facility.

The company argues that the full transport ban risks becoming a "self-inflicted blow to Europe's maritime capacity, Arctic shipping expertise, employment and strategic influence, while failing to achieve its intended geopolitical objectives."

Dynagas has also warned that terminating long-term contracts with the Yamal project, some of which run until 2065, could trigger debt defaults and leave its specialized icebreaking fleet without viable commercial use.

Blows to EU's sanctions wall

The standoff has begun to affect other elements of the EU's latest sanctions package, including the bloc's price cap on Russian oil.

Under current rules, the cap — presently set at $44.10 per barrel — must be automatically reviewed every six months to remain 15% below the average market price.

Following a sharp rise in Russian oil prices after the closure of the Strait of Hormuz, the formula would raise the cap to around $58 per barrel, potentially allowing Russia to earn significantly higher revenues from oil exports.

To avoid that outcome, the European Commission has proposed postponing the scheduled review until January 2027, keeping the cap at $44.10 per barrel for the time being.

The review was originally due to take place on July 15, yet as the tensions over the Greek issue over LNG dragged on, it has since been postponed until July 23 as EU ambassadors continue negotiations in an effort to reach agreement on the broader sanctions package.

By Nazrin Sadigova