New U.S. Sanctions On Russia LNG

Members of the U.S. Congress are proposing new sanctions against Russia. It could delay the development of natural gas export pipelines but would not do much harmed to the country’s largest energy companies.

A was introduced last month to punish the Kremlin over allegations it interfered with the U.S. elections and exercises a “malign influence” in countries including Ukraine. If the bill is passed into law, It would prohibit investments in Russia liquefied natural gas facilities outside the country, and the supply capital, technology or equipment to future domestic oil fields.

The bill includes banning the financing of any global energy projects supported by the Russian government or state-run companies is significant. According to analyst at Fitch Ratings and Aton. It could also delay the export links such as Gazprom’s Nord Stream 2 and the European leg of the TurkStream, said Aton energy analyst Alexander Kornilov.

Both pipelines, which state-run Gazprom is building in the face of opposition in the European Union and the U.S. will carry Russian gas to Europe, bypassing Ukraine.

The Nord Stream 2 link under the Baltic Sea is jointly funded by Gazprom and five region energy companies. The planned TurkStream leg from Turkey to the EU is set to receive financing from a 50-50 joint venture between Gazprom and its Turkish partner.

If the sanctions are adopted it may force foreign investors to stop providing capital to the pipelines.  Fitch Ratings oil and gas director Dmitry Marinchenko said. “Yet in the worst case, Gazprom can finance the pipelines on its own,” he said.

The cost to build Nord Stream 2 is $10.7 billion at the end of 2018 the project received about 80% of the total funding. Gazprom CEO Alexey Miller stated at the time the Russian gas giant estimated the TurkSream extension infrastructure this year at about $1.15 billion.

The LNG sanction listed in the bill would not create an immediate impact because they are no project. Russia produces the fuel only within its borders with Gazprom operating a plant on Sakhalin Island in Russia’s Far East, and Novatek PJSC running a new plant on the Yamal Peninsula in the Arctic region.

Russia will not be impacted on the global market and will continue to gain shares as much as 20% by 2035, after doubling its share to 8% last year.