Russia’s Novatek recently halted operations at its Arctic LNG 2 project, and it has no plans to restart it this winter, Oilprice reports an anonymous Reuters source as saying, seeing the development as a significant setback for the country’s gas ambitions. This project, located on the Gydan Peninsula in the Arctic, with majority shares owned by Novatek, was supposed to expand Russia’s share in the global LNG market from 8% to an ambitious 20% by 2030. However, facing mounting sanctions from the U.S. and its allies due to the Ukraine conflict, Novatek has suspended its only active LNG train and currently has no plans to restart operations until next summer.
The suspension, which has already taken effect according to the report, reflects the difficulties Arctic LNG-2 will face in finding buyers and securing the specialized ice-class vessels required for winter operations. The US sanctions, the report says, have huge implications as potential buyers have become wary of dealing with Russian LNG for reasons around potentially foreseeable retaliatory consequences. It reports the US Assistant Secretary for Energy Resources Geoffrey Pyatt as stressing that the US was stepping up efforts to choke off Russia’s revenue from LNG sales, seen as part of a broader strategy to reduce funding for Moscow’s military actions.
While the Arctic LNG 2 project is now on hold, some of Russia’s other LNG operations, such as the Yamal and Portovaya projects, have continued to deliver gas to Europe and Asia, the report disclosed. Adding that the targeted sanction approach will provide Washington with the opportunity to further limit Arctic LNG 2’s influence while maintaining a stable global LNG market.
Several LNG-laden tankers from the Arctic facility are said to be currently awaiting destinations or storage, adding to the logistical strain and signaling further challenges for Russian LNG amid tightened sanctions. Oilprice reported.