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

Borr Drilling Bags Three New Assignments for its Jack-Up Drilling Rigs

McDermott Concludes Work at PTTEP’s Kikeh Gas Field Off Malaysia

Japan's Mitsui Eyes Alaska LNG Project

Santos Hires Weststar-GAP for Timor-Leste Offshore Helicopter Services

Kazakhstan Looks to Improve Oil Production Agreements Terms

China's CNOOC Aims for Record Oil and Gas Production in 2025

Petronas to Retain National Authority After Sarawak Gas Deal

BP Targets 44% Oil, 89% Gas Increase from India’s Mumbai High Field

Shell Shuts Down Oil Processing Unit in Singapore Due to Suspected Leak

China’s CNOOC Brings Bohai Sea Oil Field On Stream

Current News

China's ENN, Zhenhua Oil Ink LNG Supply Deals with ADNOC

MODEC Wins ExxonMobil Guyana’s Hammerhead FPSO Contract

Mitigate SCC & HE to Keep Offshore Metal Structures Ship Shape

India Stretches Bids Deadline for 13 Offshore Deep-Sea Mineral Blocks

Indonesia Awards Oil and Gas Blocks to Boost Reserves

Sapura Energy Nets $22.6M in Offshore Support Vessel Contracts

CNOOC Puts Into Production New Oil Field in South China Sea

Sunda Energy Starts Environmental Consultation for Chuditch-2 Well Drilling Plans

Pakistan’s OGDC to Start Production at ADNOC’s Offshore Block by 2027

Petrovietnam, Petronas Extend PSC for Offshore Block

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