Germany and the United Kingdom Reject Russian LNG, China Increases Imports

The German Ministry of Economy has instructed the company SEFE, which was previously a subsidiary of the Russian “Gazprom” and was nationalized following the onset of Russia’s aggression against Ukraine, to terminate the contract for the supply of liquefied natural gas (LNG) from Russia. This decision can be implemented due to the declaration of force majeure, allowing the company to avoid fulfilling its contractual obligations in light of the new European Union sanctions against Moscow and the strategic direction of the bloc to abandon energy resources from Russia.

This is reported by AgroReview

Risks and Financial Consequences of Contract Termination

The contract between SEFE and the Russian side stipulated an annual import of 2.9 million tons of LNG until 2040 without the right to unilateral withdrawal. In the case of a standard termination of the agreement, compensation could amount to around €10 billion (approximately $11.6 billion). However, if force majeure circumstances are officially recognized, payment of this amount will not be required.

Actions of the United Kingdom and the Growth of China’s Shadow Fleet

The United Kingdom is also tightening restrictions on Russian LNG. Local companies are set to be prohibited from providing services for the export of Russian liquefied gas, particularly regarding the transportation and insurance of cargoes. The country’s Foreign Ministry stated:

“The ban will be gradually implemented throughout 2026 in conjunction with our European partners.”

At the same time, China is ramping up efforts to import sanctioned Russian LNG. To this end, the country is actively increasing its fleet of vessels engaged in shadow transportation. Russia, for its part, has been forming its own shadow fleet for LNG exports since last year and currently has over a dozen specialized vessels for such operations.