"Novatek, Russia's largest LNG producer, suspends production due to sanctions and lack of tankers

Russian authorities' plans to triple liquefied natural gas exports by 2030 and increase the country's share of the global market to 20% from the current 8% are being disrupted by the war waged by the Kremlin.

"Arctic LNG 2 was supposed to start deliveries to foreign customers, but not only did they not start, but in February the project manager, Novatek, was forced to drastically cut production. Buyers could not be found, ice-class tankers did not arrive, and there was nowhere to store the surplus gas.

Deliveries were supposed to start in early 2024. But last November, the US imposed sanctions on the project. "Novatek declared force majeure, and the start of exports was pushed back to March. But Novatek has now suspended production at Arctic LNG 2 due to sanctions and a lack of tankers, two sources familiar with the matter told Reuters.

"Novatek is in talks to sell LNG on the spot market or sign a long-term contract with Chinese companies, but few of them want to risk being hit by secondary US sanctions, people familiar with the talks said.

China's Cnooc and CNPC each own 10% of Arctic LNG 2. But they also import LNG from the US and do not want to jeopardise their purchases from US producers, Reuters reported.

Other shareholders, France's TotalEnergies and Japan's Mitsui, declared force majeure and froze their participation in the project.

"Novatek also did not receive the ice-class gas carriers that it was going to use to transport LNG via the Northern Sea Route. South Korea's Hanwha Ocean, which had been building some of the ships, cancelled the contract after the war broke out, and Japan's Mitsui OSK Lines can neither receive the tankers ordered nor sell them to the Russians.

"Novatek is also trying to find buyers in India, Bloomberg sources say.

Background. Earlier, Mind wrote that US sanctions had stopped the supply of icebreakers to the Russian plant.