Russia to rely on sanctioned plant to meet 2024 gas export target

Russia's plans to increase gas exports will be based on a project to produce liquefied natural gas in the Arctic which is subject to US sanctions.

Source: Bloomberg

Details: Moscow intends to export 35.2 million tonnes of the supercooled fuel this year and until 2030, according to the baseline scenario of the new macroeconomic forecast. This is 1.9 million tonnes more than last year, equivalent to about 30 cargo ships. 

With Russia's two liquefied natural gas (LNG) facilities already operating above capacity, at least half of these volumes should come from Novatek’s Arctic LNG 2 project, the main target of US energy sanctions against the Kremlin this year.

Washington and its allies are working to reduce the Kremlin's future energy export revenues amid the war in Ukraine.

To achieve this goal, the US has imposed sanctions not only on Arctic LNG 2, which started operating in late 2023, but also on tankers associated with it, which has significantly limited the pool of vessels available to the plant.

Russia has responded by creating a small shadow LNG fleet to deliver new Arctic cargo to the global market.

However, not all the vessels serving the plant are yet ice-classed. This means that they cannot take cargo from beyond the Arctic Circle when the summer navigation season ends.

Background:

• Russia has been forced to start storing gas from Russian leader Vladimir Putin's flagship Arctic project in a sign that Western sanctions are scaring off buyers.
• A Russian LNG export plant which is under sanctions has shipped cargo to Asia for the first time.

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