The United States have added a number of liquefied natural gas (LNG) projects in the Russian Arctic and seven gas carriers to their sanctions list.
The unusual situation is that all projects exist so far only on paper, and only one of the seven gas carriers is in operation. Restrictions involve Novatek's Arctic LNG-1, Arctic LNG-3, Murmansk LNG projects with a total production capacity of about 60 million tons of LNG per year. But not even an investment decision has been made on any of them yet.
The situation is similar with Russian gas carriers - the “Alexander Kosygin” gas carrier vessel was commissioned at the end of last year, two gas carriers “Peter Stolypin” and “Sergey Witte” are under construction, and four exist only in plans and do not even have names yet.
“In fact, the United States is hitting the development of LNG production in our country. There is a dirty competition - of the three main rivals of the United States in the global LNG market (Australia, Qatar and Russia) it was our projects that could give the greatest increase in production,” said the Russian government-owned Russiyskaya Gazeta (RG).
Earlier, the Arctic LNG-2 plant, the first line of which with a capacity of 6.6 million tons was launched at the end of 2023, and LNG transshipment complexes in Murmansk and Kamchatka, fell under US sanctions.
In addition, sanctions made it impossible for the project to get the gas carriers built in South Korea. Sanctions also affected Gazprom's LNG plant under construction in Ust-Luga and the planned LNG project in Yakutia. And in 2022, the sale or transfer of gas liquefaction equipment and technology to Russia was restricted.
As for the latest US sanctions list, according to Maria Belova, Director of Research at Implementa company, these projects are being built using Russian liquefaction technologies or technologies from friendly countries.
The problem is that getting on the SDN list will seriously complicate the formation of consortia with foreign participation, the sale of gas under long-term contracts, as well as the actual transportation of gas by carrier vessels. Therefore, these projects will have to be launched either on their own or in cooperation with countries whose companies are not afraid to fall under American sanctions.
Sanctions against Russian LNG cannot be circumvented in the same way as it was done with oil. There are almost 10 times fewer gas carriers on the market than oil tankers. In addition, the United States did not try to restrict trade in Russian oil, but only wanted to bring down the price of it. The main problem for Russia’s future LNG projects is the lack of ships for gas transportation. The lion's share of them is produced in South Korea, which is considered an “unfriendly” country by the authorities.
However, RG notes that there should be fewer issues with LNG sales from sanctioned projects. The most viable scheme will be the sale of gas on spot market and this will not necessarily lead to discounts, but may affect the level of loading of the plant in certain periods of time, Belova said.
At the same time, it is difficult to predict how much the deadlines for the implementation of new LNG projects will be postponed, RG notes.
Alex Shishlo, Editor in Chief of the European Bureau, Rough&Polished
