Foreign Shareholders Suspend Participation in Russia's Arctic LNG 2 Project

Monday, December 25, 2023

Foreign shareholders suspended participation in the Arctic LNG 2 project due to sanctions, renouncing their responsibilities for financing and for offtake contracts for the new Russian liquefied natural gas (LNG) plant, the daily Kommersant reported on Monday.

The project, seen as a key element in Russia's drive to boost its LNG global market share to 20% by 2030 from 8%, was already facing difficulties due to U.S. sanctions over the conflict in Ukraine and a lack of gas carriers.

China's state oil majors CNOOC  and China National Petroleum Corp (CNPC) each have a 10% stake in the project, which is controlled by Novatek, Russia's largest LNG producer and owner of a 60% stake in the project.

Kommersant, citing unnamed sources in the Russian government, said both Chinese companies, together with France's TotalEnergies and a consortium of Japan's Mitsui and Co and JOGMEC - which also have a 10% stake each - declared force majeure on participation in the project.

Novatek, CNOOC, JOGMEC and Total did not immediately respond to requests for comment. CNPC and Mitsui declined to comment.

The newspaper said the suspension may lead to Arctic LNG 2 losing its long-term contracts on LNG supplies, while Novatek will have to finance the project by itself and sell the seaborne gas on the spot market.

Initial investments in the Arctic LNG 2 project stood at $21 billion. It already faced difficulties in raising funds following Western sanctions against Russia.

Sanctions have also resulted in Novatek declaring force majeure over LNG supplies from the project, industry sources told Reuters last week.

The European Union may also impose restrictions on Russia's LNG supplies.

A Beijing-based industry official with direct knowledge of the matter told Reuters last week that CNPC and CNOOC have both asked the U.S. government for exemptions from sanctions on Arctic LNG 2.

With three processing trains, Arctic LNG 2's capacity is meant to be 19.8 million metric tons per year and 1.6 million tons per year of stable gas condensate. Production is due to start in early 2024.

Its first LNG tankers were expected to set sail in the first quarter of next year, according to Novatek.

But industry sources say commercial LNG supplies from the project are now expected no earlier than the second quarter of 2024.


(Reuters - Reporting by Lidia Kelly in Melbourne and Vladimir Soldatkin in Moscow; Additional reporting by Andrew Hayley in Beijing;Editing by Edmund Klamann and Jamie Freed)

Categories: Industry News Activity Arctic Europe Asia

Related Stories

Saipem Bags $1.5B Contract for Türkiye Largest Offshore Gas Field

TotalEnergies Inks 10-Year LNG Supply Deal with South Korea’s KOGAS

Keppel, Seatrium in $53M Arbitration Case Over Brazil Corruption Scheme

Subsea7 Secures Work at Black Sea Field off Türkiye

CIP, Petrovietnam Team Up for Offshore Wind Project in Vietnam

Seatrium Signs FLNG Vessel Upgrade Deal for Golar LNG

EnQuest Enters Indonesia with Operatorship PSCs for Two Exploration Blocks

ADNOC Signs Long-Term LNG Deal with Hindustan Petroleum Corporation

KBR-SOCAR Joint Venture Secures Work for BP in Azerbaijan

Azeri SOCAR Plans New Agreements with Oil and Gas Majors

Current News

Saipem Bags $1.5B Contract for Türkiye Largest Offshore Gas Field

Floating Offshore Wind Test Center Planned for Japan

Synergy Marine Group Completes Conversion of LNG Vessel to FSRU

PTTEP Hires McDermott for Deepwater Subsea Job off Malaysia

TotalEnergies Inks 10-Year LNG Supply Deal with South Korea’s KOGAS

Japan Picks Wood Mackenzie to Assess Trump-Backed Alaska LNG Scheme

PTTEP Greenlights $320M Offshore CCS Project at Arthit Gas Field in Thailand

Marco Polo Picks Salt Ship Design for Next-Gen Offshore Energy CSOV

CNOOC Brings Online Another Oil and Gas Project in South China Sea

Technip Energies Gets FEED Job for Inpex’ Abadi LNG Project in Indonesia

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com