New Norway Sanctions On Russia With Lingering Loopholes Allow LNG Vessels At Honningsvåg

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Mayur Joshi
Mayur Joshihttp://www.mayurjoshi.com
Mayur Joshi is a contributing editor to Regtechtimes, he is recognized for his insightful reporting and analysis on financial crimes, particularly in the realms of espionage and sanctions. Mayur's expertise extends globally, with a notable focus on the sanctions imposed by OFAC, as well as those from the US, UK, and Australia. He is also regular contributor on Geopolitical subjects and have been writing about China. He has authored seven books on financial crimes and compliance, solidifying his reputation as a thought leader in the industry. One of his significant contributions is designing India's first certification program in Anti-Money Laundering, highlighting his commitment to enhancing AML practices. His book on global sanctions further underscores his deep knowledge and influence in the field of regtech.

Norway has implemented a new set of sanctions targeting Russia’s energy sector in line with the European Union’s 14th sanctions package. These Norway sanctions, passed into Norwegian law, prohibit certain activities related to the transshipment of Russian liquefied natural gas (LNG) and other energy exports. However, a significant loophole remains—LNG vessels in service of Russia continue to use Norwegian port facilities.

Despite the newly introduced measures, Norwegian ports like Honningsvåg, located in the northern part of the country, still allow Russian LNG carriers to dock and utilize essential services, including provisioning and crew changes. This means that while sanctions exist on paper, they are not entirely effective in practice.

On September 30, 2024, the LNG carrier Fedor Litke, part of Russia’s Yamal LNG project, took advantage of services at Honningsvåg. The vessel spent several hours near the Nordkapp, utilizing the port’s resources before continuing its journey. The Fedor Litke is not an isolated case, as other Russian LNG carriers, such as the Nikolay Urvantsev, have also been able to access Norwegian port facilities in recent months.

This continued support for Russian LNG exports raises questions about the effectiveness of the Norway sanctions. Norwegian authorities have confirmed that these vessels conduct routine operations such as crew changes and restocking provisions, yet these activities remain outside the scope of the new restrictions. The inconsistency between Norway sanctions on Russian oil and LNG highlights a gap in Norway’s policy that many find concerning.

Norway Sanctions with Exceptions

While Norway has restricted certain services to Russian vessels, these measures primarily target oil tankers, not LNG carriers. Norwegian law includes a prohibition on allowing Russian oil-related vessels to enter Norwegian ports and access services. However, LNG carriers seem to escape these restrictions.

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The newly passed sanctions specifically mention a “prohibition on granting access to the port” to certain vessels linked to sanctioned Russian oil exports. Yet, LNG carriers, like those involved in the Yamal LNG project, appear exempt from these restrictions. This loophole allows vessels transporting Russian LNG to continue operating without significant disruptions.

One important clause in the new law could potentially close this loophole. The broad clause bans vessels “providing services to the Russian energy sector,” seemingly giving the Norwegian government a legal tool to deny access to vessels involved in Russian LNG projects. However, as of now, this tool has not been used to restrict LNG carriers.

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The Norwegian government has not provided clear answers as to why LNG vessels operating for the Russian energy sector are still permitted to dock at Norwegian ports. Critics argue that if the intent of the sanctions is to weaken Russia’s energy exports, this loophole undermines those efforts.

Danish Shipyards Still in Use

While Norway has allowed Russian LNG vessels to continue using its ports, Denmark, another Scandinavian nation, also plays a role in indirectly supporting Russian LNG exports. The Fayard A/S shipyard in Odense continues to provide drydock services to Russian LNG carriers, maintaining a steady relationship with Russia’s Yamal LNG project despite the sanctions.

The ice-class LNG carrier Yakov Gakkel, part of Russia’s LNG fleet, is currently undergoing maintenance at the Danish yard. This vessel is not the first of its kind to receive services from Fayard A/S since the beginning of the war in Ukraine. In fact, it is the eighth LNG carrier in service of Yamal LNG to enter the yard for repair or maintenance since February 2022, when Russia’s full-scale invasion of Ukraine began.

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Before the Yakov Gakkel, other vessels, including the Nikolay Urvantsev and Boris Vilkitsky, have used the Fayard A/S facilities. Despite Denmark being a member of the EU, which has imposed multiple rounds of sanctions on Russia, the shipyard continues to provide essential services to Russian LNG carriers, indirectly supporting Russia’s energy exports.

Fayard A/S has been asked about its role in maintaining Russia’s LNG fleet but has declined to comment, other than to state that it is complying with all existing Norway sanctions and regulations. This response, however, does little to address concerns over how such services can continue to be provided in light of the ongoing war and international sanctions efforts.

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The continued servicing of Russian LNG vessels in Danish and Norwegian facilities highlights a significant gap in the effectiveness of Norway sanctions aimed at crippling Russia’s energy exports. While both countries have introduced measures targeting Russia, they have stopped short of completely cutting off services to LNG carriers, allowing the flow of Russian gas to continue relatively unhindered.

A Widening Loophole

As long as these loopholes exist, Russia will be able to maintain its LNG export routes, utilizing Scandinavian ports and shipyards as critical support points. While sanctions against Russian oil have been stringent, the relatively relaxed approach toward LNG allows Russian energy exports to remain a vital source of revenue for the country.

With no current plans to close these gaps, LNG carriers like the Fedor Litke and Yakov Gakkel will continue to stop at Norwegian ports and Danish shipyards, using European facilities to ensure the smooth operation of Russia’s energy exports.

This situation reflects the complexities and challenges in enforcing Norway sanctions against a country that plays a significant role in the global energy market. Until all avenues for Russian energy exports are addressed, sanctions may only have a limited effect on Russia’s ability to continue its operations in the LNG sector.

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