New sanctions take aim at Russia’s war economy

«Russia has transformed into a war economy in which companies across the spectrum of Russian industry contribute to Russia’s war effort,» the U.S Treasury writes in its announcement of additional sanctions against Moscow.

The restrictive measures target more than 100 entities in fields like defense, manufacturing, technology, transportation, and financial services.

Energy projects are among the main sectors hit by the new sanctions and the Arctic is key target region.

Among the new projects affected by the U.S sanctions are the Obsky LNG, Arctic LNG 1 and Arctic LNG 3. None of the listed projects are in operation, but they are seen as crucial parts of future Russian natural gas production in the Arctic.

According to the U.S Treasury, the aim is to «limit Russia’s future energy revenues and impede Russia’s development of future energy projects […]»

The updated sanctions list also takes aim at Sovcomflot, the biggest Russian shipping company, and its construction of four LNG carriers for the Arctic LNG 2. The ships are built by the Zvezda Yard in the Russian Far East and now face an increasingly uncertain fate.

Recently, it became known that Novatek is moving up to 400 of its engineers and construction workers from the Arctic LNG 2 project to the Zvezda Yard in a bid to speed up completion of the ships.

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The mounting international sanctions will now make it utmost difficult for Novatek to continue the development of its ambitious Arctic plans.

From before, a big number of Russian individuals and  companies are on the U.S sanction list.

In November 2023, Arctic LNG 2 was sanctioned. Before that, the Saam, a 400 meter long vessel projected to serve as transshipment hub for the project, was also sanctioned. In early May 2024, the US Treasury took aim also at several heavy lift carriers of paramount importance for Novatek’s delivery of project components.

Also the UK government is taking new restrictive measures against the Russian Arctic energy industry. An updated sanctions list announced by the UK Foreign Office only a day after the U.S Treasury includes also Novatek Murmansk.

The Novatek Murmansk runs the LNG Construction Center in Belokamenka. This is where Novatek builds its floating gravity-based construction units for the Arctic LNG and other projects.

The authorities in London also target Murmansk LNG, the projected large natural project in the Kola Bay. Following the introduction of international sanctions and the exit of Russian pipeline gas from the EU, Novatek has sought to team up with Gazprom over the construction of a pipeline to Murmansk and the building of LNG production units in the Kola Bay.

The project is seen by regional authorities in Murmansk as a long-desired opportunity to provide natural gas to local households and industry.

For the the northern region, the gasification now seems like a long shot. Ultimately, the mounting international sanctions could stall activities at one of the region’s biggest industrial construction sites, the Belokamenka Center.