The federal budget of the Russian Federation for 2024 envisages a staggering allocation of unprecedented financial resources to the military-industrial complex. The last time it was so massive in the USSR.

The situation, where one-third of the funds are allocated to the army, signifies an escalation of aggression.

Unfortunately, Europe and the USA contribute to this military chest, inadequately imposing sanctions against Russian oil and gas, as stated in the column by the founder of Razom We Stand, Svitlana Romanko, and climate and energy policy expert, manager of Stand With Ukraine campaigns, Oleh Savitsky – How energy sanctions should force Russia to end war: a call to Davos.

The authors note that the loophole in oil refining, highlighted by the human rights organisation Global Witness, contibutes a huge funding for Russian aggression, "and we cannot ignore this fact."

"The ban on importing Russian liquefied natural gas (LNG) to Europe should no longer be a goal set for 2025," Romanko and Savitsky are convinced.

According to them, gas reserves in European storage facilities are sufficient. Forecasts indicate surplus and an expected decline in demand this year, reinforced by the record expansion of renewable energy and alternative LNG supplies set for 2024.

Finland's promise to ban Russian LNG deserves praise. Such a decision is needed from the major importers of Russian gas and must be supported by immediate collective action.

On the other hand, the authors point out that despite sanctions and the withdrawal of Western companies, Novatek plans to complete all three phases of the Arctic LNG 2 project in two years.

The Arctic LNG 2 project launched the production of liquefied natural gas after five years of construction.

The first phase of the terminal, assembled near Murmansk on a floating platform and towed to the Gydan Peninsula, started operating on 21 December 2023.

There is significant uncertainty, but, according to Svitlana Romanko and Oleh Savitsky, Novatek may achieve 100% production capacity of the first phase earlier than planned.

"The critical bottleneck of the project, however, is currently LNG export logistics. Sanctions have slowed down the construction of 15 ice-class Arc7 LNG tankers, but the Russian Zvezda shipyard can deliver the first two or three vessels in 2024.

Zvezda, in collaboration with te conglomerate Samsung Heavy Industries, initially planned to build ten ships, but SHI halted work without officially terminating the partnership. Zvezda is now seeking assistance from China," the authors note.

They add that three ships for Sovcomflot and one for MOL are nearing completion but still do not have new operators.

There are about 600 LNG hauliers in the world. It is unlikely they will using them to transport sanctioned cargo. Unlike expensive LNG hauliers, the oil transportation market, covering thousands of vessels, is ready to trade, violating the sanctions.

Increasing cooperation with China could be a solution for Novatek to circumvent sanctions, warn Romanko and Savitsky.

"So, despite the significant US efforts on sanctions against the project, they apparently are absolutely insufficient. All loopholes for circumventing the sanctions need to be closed," urge the authors.

According to them, Ukraine is ready to strengthen gas supply security in the EU. In particular, Ukrainian large gas storage facilities have already proven their effectiveness in stabilising gas prices in Europe during the winter.

As the Financial Times notes, Ukraine can become an important tool in solving this problem, strengthening gas supply security in the EU.

"While in Davos they discuss the economic future of the world, Kyiv should send a strong call: put an end to Russian oil and gas. And then you will not only be able to stop the war in Ukraine but also effectively resist the spread of autocracy and accelerate the global energy transition," the authors conclude.