US sanctions stop gas supply from Russian LNG project, Bloomberg reports

The start of supply from Russia's new project for producing liquefied natural gas (LNG), Arctic LNG 2, has been postponed after the company announced force majeure circumstances regarding supplies due to US sanctions.

Source: Bloomberg, citing sources, as reported by European Pravda

The company said that Russian company Novatek PJSC, which manages the Arctic LNG 2 project, has sent a force majeure notice to some buyers, as the US sanctions imposed on the project in November are currently preventing the supply of gas.

Force majeure is a legal provision that allows companies to suspend supplies due to factors beyond their control.

While US sanctions have already clouded the prospects for Arctic LNG 2, the move poses significant challenges for the project and could limit additional LNG supply on the global market this winter, journalists said.

The development increases risks to gas supplies in other markets, as ships have rerouted from the Red Sea in recent days due to attacks on vessels in the region. European gas prices rose 8.3% before settling 2% higher at €34.20 per megawatt hour.

Analysts say that force majeure does not necessarily mean that LNG will not be exported from Arctic LNG 2, but only that external factors will likely prevent Novatek from fulfilling all its contractual obligations.

The Arctic LNG 2 project is crucial to Russia's ambitions to more than triple LNG production by the decade's end.

Background:

• Earlier, it was reported that France does not believe that US sanctions against a sizable Russian project for producing liquefied natural gas (LNG), in which the French oil company TotalEnergies is a shareholder, pose a significant risk to gas supplies to Europe.
• Prior to that, the US State Department announced sanctions against dozens of Russian individuals and legal entities, aimed, among other things, at its energy projects, in particular at Arctic LNG 2 LLC, the operator of the project of the sanctioned Russian company Novatek for the large-scale production and supply of liquefied gas in Siberia.
• At the same time, on 9 November, the European Parliament adopted a resolution calling for stronger control over the implementation of sanctions against Russia at EU level, as well as greater efforts to limit Moscow's ability to circumvent such measures.

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