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Russia’s plan to expand exports of liquefied natural gas, affected by US sanctions

3 April 2024
Import-Export
energynomics

Russia’s plan to rapidly expand its exports of liquefied natural gas (LNG) is stalling because of US sanctions, which are delaying deliveries from a major new project, reports Bloomberg.

The Arctic LNG 2 facility started production in December, but has so far been unable to export gas due to US restrictions. Production was significantly reduced in February, according to data analyzed by Bloomberg. The publication Vedomosti, the first to report the drop in production, reported that Arctic LNG 2 could not export fuel and did not have enough storage space, according to Agerpres.

Novatek PJSC, the main shareholder of the unit near the Arctic Circle, intended to start deliveries by March 31. Officials at the Russian energy company did not respond to requests for comment.

Novatek has been negotiating to sell LNG to buyers in China, but it is not known when it will be able to do so due to fears of US retaliation, sources told Bloomberg on condition of anonymity.

These developments show how difficult it will be for Russia to meet its goal of tripling LNG exports by 2030. The country, the world’s largest exporter before the invasion of Ukraine prompted Europe to shun pipeline purchases, exported passed approximately 32 million tons of LNG, a fraction of the total global trade of 412 million tons.

In November, the United States imposed sanctions that targeted Novatek, but also prompted the exit of other Arctic LNG 2 investors, including TotalEnergies SE and Mitsui & Co, both declaring force majeure.

Gas production at the Arctic LNG 2 project was 83 million cubic meters in February, compared with 250 million cubic meters in January and 425 million cubic meters in December, according to data analyzed by Bloomberg.

Novatek is looking to send most of its LNG to China via the Northern Sea Route, which connects Europe and Asia, and is also trying to find buyers in India, the sources said.

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