Russian Novatek is loading a new LNG cargo from its Arctic LNG 2, a heavily sanctioned facility that was only completed recently, while under sanctions. This is the tenth cargo of liquefied gas since June, Bloomberg reported.
Arctic LNG 2 began liquefying gas in late 2023, which was the year the Biden administration imposed sanctions on the facility in a bid to pressure Russia’s key energy industry. The European Union has also sanctioned Novatek. The sanctions have cut off the Russian company’s access to Western funding and shipping insurance, but, like oil exporters, it has found alternatives. This, despite the sanctions, exports of liquefied gas from Arctic LNG 2 began in August 2024 and continued until November, before the weather and, per Bloomberg, lack of buyers, put a temporary end to the shipments.
This year, exports have restarted, all of them going to China, after China stopped buying U.S. liquefied gas amid the two countries’ trade spat. Not only that, but Novatek last month reported record production for August, thanks to the summer thawing of the Northern Sea Route, which made it possible for more LNG cargos to be shipped to Asia. Since late August, when it started buying LNG from Novatek’s second facility, China has received over 370,000 tonnes of the superchilled fuel.
Arctic LNG 2 is designed for three trains of 6.6 million tons per year each for a total planned capacity of 19.8 million tons annually. Sanctions on Russian shipyards and technology suppliers have delayed deliveries of additional carriers, creating a shortage that caps export flexibility.
Located in the Gydan Peninsula, right next to one of Russia’s legacy oil and gas producing regions, the Yamal Peninsula, Novatek’s Arctic LNG 2 was considered key to Russia’s efforts to boost its global LNG market share from 8% to 20% by 2030-2035. U.S. and EU sanctions have interfered with these plans, but they appear to have failed to cancel them completely.
By Irina Slav for Oilprice.com
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