International sanctions hamper progress at the Arctic LNG 2. Photo: Belokamenka51 on VK

Message to market: Russian Arctic LNG will not be delivered

Natural gas company Novatek has reportedly informed clients that it will not be able to deliver LNG from its new Arctic project as promised.
December 22, 2023


A huge construction project is rising on the shore of the far northern Ob Bay. The Arctic LNG 2 plant is projected to produce up to 19,8 million tons of LNG per year. All of it is to be exported.

It is the be biggest industrial project of its kind in the Arctic, and it will make Novatek one of the world’s major producers of the liquified gas.

But troubles are mounting, and the Russian Arctic LNG plans crumbling.

Following Russia’s onslaught on Ukraine, international sanctions have hit Putin’s oil and gas industry and Novatek is today not able to meet objectives.

According to Reuters, the company recently declared a force majeure over supplies from the Arctic LNG 2. Reportedly, the message has been sent to Chinese companies Shenergy Group and Zheijang Energy, as well as Spanish company Repsol.

Both the USA and the EU have targeted the Russian energy sector, and international pressure has mounting on the Russian LNG sector.

In early November this year, the U.S State Treasury added the Arctic LNG 2 to its sanctions list. The announcement came only few weeks before Novatek was due to launch production at the first of the project’s three gravity-based structures.


The structure was sent from the construction plant in Belokamenka outside Murmansk towards Utrenneye, the production site in the Gulf of Ob in July. Few weeks later, the 110 meter high, 640,000 ton heavy installation was connected to land-based facilities. The installation has the capacity to produce up to 6,6 million tons of LNG per year.

A second gravity-based structure is under construction in Belokamenka, but delays are likely.

Novatek also has major challenges with the construction of a fleet of LNG carriers that can shuttle between Utrenneye and the markets.

The Arctic LNG 2 is estimated to have an investment frame of about $21,3 billion. Novatek owns 60 percent of the project, while French energy company Total owns 10 percent, China’s CNPC - 10 percent, CNOOC - 10 percent and a consortium of Japan’s Mitsui & Co and JOGMEC - 10 percent.

Each of the shareholders are promised parts of the LNG production proportionate to their ownership stakes. The force majeure declarations only concern the LNG reserved Novatek, newspaper Kommersant informs.



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