Novatek, Russia’s largest producer of liquefied natural gas (LNG), has sent force majeure notifications to some of its clients over future supplies from its Arctic LNG 2 project, four industry sources have told Reuters.
Commenting on the issue, Italian academic Francesco Sassi, describes this to be “a consequence of US sanctions against Russia’s LNG industry” and “a part of a larger confrontation between the two gas superpowers.”
📯🇷🇺Russia's Novatek,🇷🇺largest producer of LNG, has sent force majeure notifications to clients of its major Arctic LNG 2 project.
This is a consequence of🇺🇸US sanctions against the🇷🇺Russia's LNG industry. A part of a larger confrontation between the two gas superpowers.
🧵 pic.twitter.com/ZxxZYFkP94— Francesco Sassi (@Frank_Stones) December 22, 2023
He adds:
“The project represents a crucial juncture and test match for Russia’s LNG strategy. Moscow seeks to reduce its exposure from imports of Western technologies and showcase the Arctic Cascade liquefaction technology developed by German Linde and Severstal before the German company withdrew from operations in Russia in the aftermath of Moscow’s invasion of Ukraine. Additionally, Russian companies have managed to domestically develop technologic solutions to build the gravity base structures which will sustain the three production trains.
Yet, despite billions of financial support to Russian companies, not all components of the Arctic LNG-2 could be fabricated within Russia’s borders. The support of Western companies has been vital for the development of the sector and Novatek’s running megascale Yamal LNG. In early November, the🇺🇸US State Department sanctioned Arctic LNG 2 and the transshipment terminals which will operate in Murmansk and Kamchatka, shortening the distance to European and Asian markets.
De facto, the sanctions bar companies from purchasing LNG from the project. Furthermore, Korean companies stopped servicing the contracts with Novatek for the construction of Arc7 vessels which are needed to transport LNG from the Russian Arctic to transshipment hubs. In this scenario, Novatek has communicated to certain customers such as China Zhejiang Energy and Spain Repsol that the company faces serious hurdles, outside its control, preventing the fulfillment of contractual obligations.
This would be a blow to Novatek and the Kremlin strategy to make Russia an LNG superpower by tripling exports by 2030. Right now, Asian and European partners of Arctic LNG-2, meaning China CNPC and CNOOC Japan JOGMEC and Mitsui France TotalEnergies are seeking exemptions to sanctions as all these companies also have huge investments in the US LNG sector and they possess a certain leverage over Washington.
The Biden Administration has openly asserted that it aims to “kill that project” referring to Arctic LNG-2 and “systematically reduce Russia’s future energy revenue.” The Kremlin will do anything to counter these measures in 2024. ”
Right now, Asian and European partners of Arctic LNG-2, meaning
🇨🇳China CNPC and CNOOC
🇯🇵Japan JOGMEC and Mitsui
🇫🇷France TotalEnergies
are seeking exemptions to sanctions as all these companies also have huge investments in the🇺🇸US LNG sector and they https://t.co/Oq60dFc2eZ— Francesco Sassi (@Frank_Stones) December 22, 2023