Russia's Novatek cancels Arctic LNG-2 project in Siberia due to Western sanctions – Reuters

The Russian Novatek company has been forced to abandon its ambitious Arctic LNG-2 project after Western sanctions restricted its access to ice-class tankers. Instead, it will focus on developing its project in the port of Russia's city of Murmansk.

Source: Reuters with reference to its sources

Quote: "Russia has been focusing on developing global sales of seaborne LNG to make up for a drop in pipeline gas exports to Europe, which have plummeted to post-Soviet lows amid a severe rift with the West over Ukraine."

Details: The possible shutdown of the Arctic LNG 2 plant construction on the Gydan Peninsula may hinder Moscow's goal of increasing its share in the global LNG market to one-fifth by 2030-2035 from about 8% at present. 

The project was supposed to become the largest of its kind in Russia, with a final capacity of 19.8 million tonnes of liquefied natural gas (LNG) per year and 1.6 million tonnes of stable gas condensate on three trains per year. 

Novatek did not respond to Reuters' request for comment on its plans.

In December, the company commenced LNG production on the first Arctic LNG 2 project train. Still, it fell behind schedule in delivering the first shipments of supercooled gas following a shortage of ice-class gas carriers. 

Reuters' sources reported that the conversion of methane into liquid at a temperature of 163 degrees below zero at the plant was suspended. 

The second and third trains were supposed to start operating in 2024 and 2026, respectively. Instead, the company focused on developing the LNG plant in Murmansk, which Novatek announced in June 2023.

The Murmansk LNG project is expected to be even larger than Arctic LNG 2, with a final capacity of 20.4 million tonnes annually. Production on the first two trains is planned to be launched by the end of 2027, with the last train scheduled for 2029. 

One of the advantages of the Murmansk project compared to Arctic LNG 2 will be its access to a non-freezing port in the Barents Sea. 

"All attention now is on Murmansk, the ice-class tankers are not necessary there," a source said.

Support UP or become our patron!