US sanctions disrupt launch of Novatek's largest LNG plant

Novatek, Russia's largest producer of liquefied natural gas (LNG), has notified some of its customers that some force majeure circumstances have arisen regarding future supplies from its Arctic LNG 2 project.

Source: Reuters with reference to its sources

Details: Novatek refused to comment on the situation.

The notifications were sent after the US imposed sanctions on Arctic LNG 2 last month, which is due to start production by the end of 2023 or early 2024.

The design capacity of Arctic LNG 2, with three trains, is 19.8 million metric tonnes per year and 1.6 million tonnes per year of stable gas condensate.

The project is a key element in Russia's bid to increase its market share on the global LNG market to a fifth by 2030, from around 8% now.

The project's first LNG tankers were expected to set sail in the first quarter of 2024.

One of the sources said clients that have contracted to buy LNG, such as China's Shenergy Group and Zheijang Energy and Spain's Repsol, have received force majeure notices.

Repsol, which signed a heads of agreement with Novatek to supply LNG from Arctic LNG 2 and other projects in 2019, stated that it does not have a firm gas supply contract and has not received any force majeure notice.

Shenergy Group and Zheijang Energy did not respond to requests for comment.

Background: In November, it was reported that the US government was planning to prevent Russia from becoming one of the main exporters of liquefied natural gas (LNG), which could cause disruptions in world energy markets, a development Washington has so far tried to avoid.

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