UK Exempts South Korea from Russian LNG Import Sanctions, Easing Supply Concerns

On October 1, the UK government announced an exemption from sanctions on Russian liquefied natural gas (LNG) imported by South Korea under existing long-term contracts. This exemption, valid until March 31, 2028, follows a similar measure by the European Union, allowing for the stable import of 1.5 million tons of LNG annually until the contract's expiration.

 

According to the Ministry of Trade, Industry and Energy, the exemption was confirmed on October 1, allowing South Korea to continue importing Sakhalin-2 LNG under its long-term contract.

 

Korea Gas Corporation has been importing 1.5 million tons of LNG annually from the Sakhalin-2 project under a long-term contract signed in July 2005, which runs from April 2008 to March 2028.

 

However, concerns arose that the EU and UK sanctions on shipping and insurance services related to Russian LNG could disrupt the import of contracted volumes after 2027.

 

To minimize the impact on domestic LNG supply, the South Korean government has been requesting temporary exemptions from the EU and UK. This issue was discussed as a key economic and trade matter during the Korea-EU summit in Brussels on June 10, followed by high-level meetings and consultations to explain the necessity of exemptions for existing long-term contracts.

 

The EU recognized the exemption for South Korea's existing long-term contracts for Russian LNG on July 23. However, since UK insurance services are also used for transporting Sakhalin-2 LNG, the EU's measures alone could not fully resolve the import challenges.

 

The South Korean government continued discussions with the UK, reiterating its position during a video conference between trade ministers on September 11.

 

The UK's recent decision applies to LNG imported under contracts signed before June 17, 2025, from the Sakhalin-2 project. As a result, UK companies will be able to continue providing shipping and insurance services for these volumes until March 31, 2028.

 

Sakhalin-2 LNG accounts for about 3% of South Korea's annual LNG imports, playing a crucial role in ensuring stable natural gas supply during the winter months.

 

A Ministry official stated, "We plan to ensure that this exemption is implemented smoothly and will continue to manage the stable import of Sakhalin-2 LNG until the contract's expiration."