The UK slapped sanctions on Russia’s biggest oil producers and two Chinese energy firms that deal with Moscow as London seeks to intensify pressure on the Kremlin over the war in Ukraine.
Britain blacklisted state-run oil giant Rosneft PJSC and Lukoil PJSC on Wednesday, the Office of Financial Sanctions Implementation said in a statement. It also targeted Chinese firms that handle Russian energy for the first time: a terminal handling Russian liquefied gas and an oil refiner.
Western nations are turning the screws on Russia’s energy sector in a bid to curb the flow of petrodollars to the Kremlin and limit President Vladimir Putin’s ability to finance the war. Taxes from the oil and gas industries account for about a quarter of the federal budget.
“As Putin’s aggression intensifies, we are stepping up our response,” UK Chancellor Rachel Reeves said in a separate statement.
The UK sanctioned China’s Beihai liquefied natural gas terminal, which has become the key offloading point for cargoes from Russia’s Arctic LNG 2 project, as well as Chinese oil processor Shandong Yulong.
While the UK previously imposed wide-ranging sanctions on tankers transporting Russian oil and gas, the targeting of two big oil producers – as well as Chinese firms – marks an escalation.
Rosneft and Lukoil account for more than half of all oil produced in Russia and undertake business of “strategic significance” to the government, the UK government said. The UK also sanctioned a liquefied natural gas import facility and a company that processes Russian oil.
Of the three major sanctioning authorities targeting Russia – the others being the US and EU – the UK’s measures have had the least impact on Russia’s oil tankers, so it’s not clear how effective these measures will be. A greater concern for Moscow might be if Washington and Brussels followed suit.
The sanctioning of Chinese firms comes at a time when London had been seeking to strengthen economic ties with Beijing.
When Joe Biden was US president, western powers refrained from taking joint, sweeping actions against Russian oil giants, in part because of concerns about the market impact, according to people familiar with the matter, who requested anonymity as the deliberations aren’t public.
LNG Plant
Beihai has taken nine deliveries from the US-sanctioned plant since late August, according to ship-tracking data compiled by Bloomberg. Shandong Yulong’s refining complex has a processing capacity of 400,000 barrels a day, making it larger than almost every refinery in Europe.
Wednesday’s list also included Indian refiner Nayara Energy Ltd., a major buyer of Russian crude which owns a 400,000-barrel-a-day plant in Vadinar, Gujarat. The European Union has already imposed sanctions on the company, which is part-owned by Rosneft and accounts for almost 8 percent of India’s refining capacity.
The British government has also announced it will ban imports of petroleum products refined in third countries from Russian-origin crude oil “to further restrict the flow of funds to the Kremlin.” The EU announced such restrictions in July.
Source: Bloomberg News