Arctic LNG - 2, the largest Russian project for the production of liquefied natural gas (LNG), implemented by Novatek, is in danger of collapse.
The US sanctions deprived the project of LNG buyers, investors and the necessary equipment. As a result, Novatek was forced to significantly reduce gas production for Arctic LNG - 2 on the Gydan Peninsula. According to information provided by a source familiar with the situation, gas production for the project amounted to only 55 million cubic meters in May, which is four times less than in April, when production reached 215 million cubic meters.
For comparison, in December last year, Novatek produced 425 million cubic meters of gas at the project, but since then the company has been forced to stop almost 90% of production. The $25 billion Arctic LNG-2 project has been in development for almost 10 years and was supposed to start shipping the first batches of LNG in the first quarter of this year.
However, the US sanctions imposed in November 2023 thwarted these plans: foreign shareholders froze their participation, and the South Korean shipyard refused to supply ice-class gas tankers. Only three of more than 20 tankers planned for the LNG transportation were built and delivered to Novatek - they were all Russian-made at the Zvezda shipyard.
In April of this year, the Arctic LNG-2 project suspended the production of liquefied natural gas. In May, gas production was reduced to a minimum over the past six months. The sanctions led to the termination of supplies of key equipment and materials needed to complete the construction of the plant and start LNG production, avia.pro reports.
Alex Shishlo, Editor in Chief of the European Bureau, Rough&Polished
