Russia's major gas project stalls as sanctions strengthen – Bloomberg

The sanctioned Arctic LNG 2 gas terminal in Russia has suspended the process of liquefying natural gas (LNG) due to restrictions imposed by Western sanctions that complicate the transportation and sale of products.

Source: Bloomberg

Details: Commercial liquefaction at the plant has been halted due to the accumulation of stocks, as the plant cannot freely export gas, the sources said on condition of anonymity because the information is non-public.

The plant, located near the Arctic Circle, has been the target of several waves of sanctions imposed by the West last year. The restrictions the US and its allies imposed in response to the Russian full-scale invasion of Ukraine have made it difficult for Arctic LNG 2 to access ice-class tankers built for the project in South Korea and scared off foreign buyers.

As a result of the shutdown, average daily gas production from the field that supplies gas to the plant dropped to around 5.3 million metres cubed this month, less than half the 12.1 million meters cubed average daily production in September.

Some of the gas processing is needed to keep the LNG plants running even without commercial production. Earlier this year, Arctic LNG 2 was already processing small gas volumes before loading products onto tankers.

Even though the plant started shipping liquefied natural gas in August using conventional tankers, whose owners are often unknown, none of the eight cargoes found a buyer.

The Arctic LNG 2 project is designed for an annual capacity of 19.8 million tonnes of gas, but currently, only one line, capable of producing 6.6 million tonnes per year, is in operation. The company gradually increased natural gas production and liquefaction in the summer, and in August, with the start of exports, the volumes reached this year's maximum.

Background: 

• Russia planned to organise ship-to-ship transhipment of liquefied natural gas and gas condensate in the Barents and Bering seas.
• A sanctioned Russian gas tanker was spotted near the Suez Canal while transhipping gas to a non-sanctioned UAE tanker.
• Western sanctions against Novatek, Russia's second largest natural gas producer, have worked: the company has frozen its plans to build new gas liquefaction plants.

Support UP or become our patron!