The Insurance Gap in UK Sanctions on Russian LNG
Three LNG (liquefied natural gas) carriers sanctioned by the UK for their involvement in Russia’s energy trade remain insured by a British P&I Club.
Owned by Greek LNG shipping company Dynagas, the Clean Planet, Clean Ocean and Clean Vision have been transporting Russian LNG from the Yamal project in the Arctic for several years. Although these vessels were sanctioned by the UK in October 2025, they still receive protection and indemnity cover from NorthStandard.
The arrangement remains lawful because the sanctions imposed on the vessels only restrict activities such as access to UK ports and UK ship registrations, rather than imposing a comprehensive prohibition on British companies providing them with insurance.
Now that the UK is moving to introduce stricter restrictions on maritime services connected with Russian LNG from January 2027, several questions arise over how effective vessel sanctions can be when insurance, reinsurance and shipping services operate across several jurisdictions. This is particularly significant as the EU maintains a more limited exemption for certain Russian LNG trades, creating a discrepancy between the UK and EU sanctions regimes.
On 15 October 2025 the UK government imposed shipping sanctions on seven LNG vessels, among which were the three Dynagas vessels. Although the phrase “sanctioned vessel” can be misunderstood as meaning that all dealings with the vessel are prohibited, the legal effect of sanctions depends on the specific restrictions imposed.
These limitations strictly prohibited the vessels from accessing UK ports and UK registration while also allowing for detention and movement directions but did not restrict every commercial relationship with the vessels.
This is exactly the point that NorthStandard emphasises; its cover remains fully compliant with applicable sanctions and does not extend to trades that breach sanctions, enabling the Club to provide P&I cover for Dynagas.
The significance of Dynagas extends beyond the three sanctioned vessels. The company operates five Arc7 ice-class LNG carriers, which play a substantial role in transporting LNG from Russia’s Yamal project. As one of the country’s largest Arctic developments, Yamal relies heavily on these LNG carriers, each capable of carrying more than 170,000 m³ and specifically built for severe Arctic conditions.
Dynagas has contributed massively to the project’s exports, having transported around 36 million tonnes of Russian LNG since 2022. According to FT calculations using data from Kpler, 11 Dynagas vessels completed 144 voyages and transported more than 10 million tonnes of Russian LNG since the beginning of 2025.
However, the company may need to look for a new insurer, as the UK is moving to tighten its sanctions regime by restricting maritime services connected with Russian LNG from 1 January 2027. The current general licence is due to expire on this date, creating uncertainty over whether UK-based insurers will be able to continue providing cover for vessels involved in the trade.
NorthStandard has warned that, instead of bringing the LNG trade to an end, the stricter UK sanctions may simply force shipowners towards non-UK insurers. This concern is particularly relevant as the EU has maintained a narrower exemption for certain Russian LNG trades, enabling some activities to continue under EU rules after equivalent UK permissions expire.
Under qualifying long-term contracts, concluded before 24 February 2022, the EU regime allows transfers of Russian LNG to third countries. This exemption is subject to limits based on the volume of Russian LNG transported by the relevant operator in 2025 and initially applies until 25 July 2027.
This highlights a noticeable divergence between the two sanctions regimes. While the UK permissions covering certain Russian LNG transportation and related financial services expire on 1 January 2027, qualifying activities may continue for longer under the EU regime.
In relation to P&I clubs and reinsurance, this lack of alignment between the UK and EU sanctions regimes creates a more complex compliance problem. Under the International Group, 12 P&I clubs cover roughly 87% of global ocean-going tonnage, with major claims pooled among the clubs before being passed into commercial reinsurance programmes. This means that UK sanctions might not necessarily remove the UK connection to the underlying risk if the risk eventually reaches the London reinsurance market.
Therefore, Lloyd’s of London has reportedly been lobbying the UK government to delay the January 2027 deadline for financial-services providers amid concerns over the impact that differing UK and EU rules could have on existing insurance and reinsurance arrangements. The exposure of the London market to internationally pooled risks means that activities which remain lawful elsewhere may still create compliance difficulties once part of the risk reaches UK-based reinsurers. Lloyd’s also emphasised the need for greater alignment between sanctions regimes, alerting that regulatory discrepancies can result in serious economic consequences.
The case of Dynagas demonstrates how difficult it is to apply sanctions effectively to an industry that operates within an interconnected international network. While the UK is moving to close the gap that currently enables British insurers to support certain Russian LNG trades, differences between the UK and EU regimes may create regulatory burdens for the P&I and reinsurance markets. There is also the risk of losing business to non-UK insurers and reinsurers without necessarily bringing the underlying LNG trade to an end.
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