The British government yesterday quietly issued two sweeping import licences for Russian oil and gas. This may ease European supply problems but makes a mockery of Sir Keir Starmer’s claims to be getting tough on Putin.
The first of the licences, released late last night with minimal fanfare, grants an indefinite general trade licence allowing imports of diesel and jet fuel refined from Russian crude in third countries. This means that fuel processed in India or Turkey from Russian oil can now legally enter the UK market. The second is a time-limited licence covering maritime transportation services, financing and brokering for liquefied natural gas (LNG) from Russia’s Sakhalin-2 and Yamal projects, two of the Kremlin’s largest and most lucrative gas export terminals.
In February, Starmer told the Munich Security Conference that ‘Russia has proved its appetite for aggression’ and that ‘this time it must be different – we must build our hard power’. At a Coalition of the Willing conference in Paris, he promised to ‘keep up the pressure on Russia, including further measures on the oil traders and shadow fleet operators funding Putin’s war chest.’ And just eight weeks ago, Defence Secretary John Healey told BBC Radio 4 that authorising the Royal Navy to seize Russian shadow fleet tankers was ‘a signal to Putin that he may want us to be distracted by the Middle East but we’re ready to act’.
These new export waivers will literally put money in the Kremlin’s pocket
Now, thanks to the UK’s new sanctions-waiving licence, many of the tankers carrying Russian oil and LNG will be doing so with official permission from His Majesty’s Government – and profiting British businesses.
Even as successive British governments have pledged vocal support for Ukraine, the UK has continued to act as a major re-export hub for Kremlin gas ever since Putin’s invasion of Ukraine disrupted pipeline supplies to the continent. Most Russian LNG arrives at terminals such as the Isle of Grain in the Thames Estuary (Europe’s largest liquefied gas terminal, owned by Centrica and US Energy Capital Partners) and the Milford Haven terminals Dragon (Shell/VTTI) and South Hook (majority owned by QatarEnergy). It is then regasified and exported to Europe via two bi-directional pipelines: the Bacton–Zeebrugge Interconnector running across the North Sea to Belgium with an export capacity of 20 billion cubic metres a year, and the Balgzand–Bacton Line (BBL) connecting to the Netherlands.
While direct Russian LNG imports to the UK have been formally banned since January 2023, a UK-based shipping company – Seapeak – transported 37.3 per cent of all cargo from Russia’s Yamal LNG project last year, making it the single largest carrier for the Kremlin’s flagship Arctic export terminal. The new Yamal services licence is, in effect, a government endorsement of business that British companies were previously conducting in a legal grey zone. Today’s new UK government-issued licence is specifically designed to facilitate Sakhalin-2 and Yamal maritime transport services including shipping and financing – all completely legal because Russian LNG is not subject to international sanctions.
The government’s justification for granting waivers to Russian energy is that soaring fuel costs driven by the US-Israeli war on Iran forced the move. Indeed the US Treasury Department yesterday also extended similar waivers for Russian oil exports, citing similar reasons. The closure of the Strait of Hormuz and the consequent shut-off of Qatari LNG have only pushed up global demand for Russian-produced gas.
But it is precisely the same argument that has made the EU one of the biggest de facto funders of Putin’s war as legal imports of Russian oil and gas continue and indeed increase regardless of various sanctions packages. European imports of Russian LNG increased 16 per cent year-on-year in the first quarter of this year. France and Belgium, meanwhile, remain the EU’s most shameless consumers of Yamal gas.
Since the 2022 invasion, Kremlin coffers have received at least $280 billion (£209 billion) from the EU in payment for Russian energy, far more money than Europe has given Ukraine in military and economic aid. But the EU, at least, has adopted a binding legal framework to eliminate all Russian gas imports by the end of next year. Britain, by contrast, has issued an open-ended licence with no termination date and a commitment only to ‘periodic review’.
When news of the British waiver broke this morning, there were signs that even senior Labour backbenchers were disturbed. Foreign Affairs Committee chair Emily Thornberry told the BBC that the people of Ukraine have been ‘very let down’ by the decision to relax sanctions:
They don’t understand, given that we promised that we would stop this loophole in October, and we still haven’t done it. In fact, it seems to have got worse.
The Foreign Office insists it is ‘completely wrong to say we are lifting any sanctions. We are strengthening them.’ They insisted that they are introducing ‘new and strengthened sanctions’ on oil and gas. How they’re squaring this circle, though, remains unclear.
Starmer has repeatedly accused Reform UK of being ‘pro-Putin’ and soft on Russia. His government sanctioned 544 shadow fleet vessels and convened Joint Expeditionary Force legal meetings to build the architecture for maritime interdiction. It has presented itself, at every available international forum, as the hard core of European resolve. London’s Russian oil waivers came on the same day that the G7 published a statement reaffirming its ‘unwavering commitment’ to put pressure on Russia, including sanctions on the energy sector and ‘actions against entities in third countries that materially support Russia’s war effort’.
Yet in practice, no shadow fleet vessel has been apprehended. The new export waivers the British government has authorised will, instead, literally put money in the Kremlin’s pocket.
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