**Ukraine Closes Loophole in Sanctions Regime, Blacklisting Novatek and 18 of its Subsidiaries**
In a strategic move to cut off Russia’s war funding mechanisms, Ukraine has blacklisted Novatek, Russia’s largest private fossil gas producer, along with 18 of its subsidiaries. The Ukrainian government is urging the EU and US to follow suit immediately.
This decision was made by President Volodymyr Zelenskyy on May 1st, implementing a decision by Ukraine’s National Security and Defence Council that extends sanctions to major LNG operations, including Yamal LNG, Arctic LNG 2, and Murmansk LNG. The Ukrainian government has communicated these sanctions to the European Union, United States, and other allies, urging them to adopt similar measures as part of a coordinated strategy to cut off Russia’s energy revenue streams.
**LNG Operations Fund Kremlin’s War Machine**
Novatek’s LNG operations have become a strategically important revenue stream for the Kremlin following the end of pipeline gas transit through Ukraine. The company’s unrestricted LNG exports to European and global markets remain “a dangerous loophole in the sanctions regime and a growing revenue stream for the Kremlin,” according to energy security advocacy group Razom We Stand.
In 2024, European ports received 17.5 million tons of Russian LNG, valued at €7.3 billion, substantially exceeding Gazprom’s revenue from pipeline transit through Ukraine, which amounted to just €5.8 billion during the same period. Despite the EU significantly reducing pipeline gas imports from Russia, Novatek has maintained its market presence.
**Sanctions Target Loophole Between State and Private Gas Producers**
Ukraine’s blacklisting of Novatek represents a strategic move to close a critical sanctions loophole that has allowed Russia to maintain substantial gas revenues despite Western restrictions. Unlike state-owned Gazprom, which has faced significant sanctions affecting its pipeline exports, Novatek – as Russia’s largest private gas producer – has largely evaded comprehensive Western sanctions on its core LNG business.
**Call for Coordinated International Response**
Razom We Stand is calling on policymakers, civil society, and financial institutions in the EU, US, and allied countries to “respond swiftly to Ukraine’s action and close the remaining channels through which Russian fossil fuels reach global markets.” The Ukrainian government has emphasized through these sanctions that cutting off Russia’s energy revenue streams remains one of the most effective non-military means of diminishing Russia’s ability to sustain its war effort.
**CEO Mikhelson Avoids Western Sanctions**
Among the individuals affected by Ukraine’s latest sanctions is Novatek CEO Leonid Mikhelson, who has notably avoided full Western sanctions despite his company’s documented role in supporting Russia’s war economy. Financial analysis reveals that Mikhelson has secured preferential treatment from the Russian government, including exclusive development rights and tax concessions.
**A Test of Moral Clarity**
Svitlana Romanko, Founder and Executive Director of advocacy group Razom We Stand, called the decision “a landmark decision” that “targets the heart of Russia’s LNG export expansion strategy.” She emphasized that “every dollar Novatek makes fuels the missiles that rain down on Ukrainian cities” and called the situation “a test of moral clarity, economic rationale, and geopolitical resolve.”
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