Sanctions on Russia’s Arctic LNG project could tighten energy markets – FT
Including Russia’s Arctic LNG 2 energy project in the US State Department’s sanctions list confirms Washington’s ambition to prevent the country from becoming a major exporter of liquefied natural gas, and may cause disruptions in global markets, the Financial Times reported on Sunday.
Sanctions on the Russian gas enterprise, which is located on the Gyda Peninsula in the Arctic, were introduced on November 2, banning third countries in Asia and Europe from purchasing LNG produced by the project when it starts operating in 2024.
The White House has tried not to disrupt energy flows in order to avoid increasing the pressure on its allies in Europe, which are struggling with shortages after Russian pipeline gas was halted in early 2022. However, the US’ latest ban would effectively block Western buyers from supplies provided by the Russian project, sending more ripples across the world’s markets.
The sanctions, the first affecting LNG supplies, are expected to tighten the market, according to energy and macro research consultancy Energy Aspects, as cited by the media.
If the Arctic LNG 2 project does not begin operating as planned in 2024, it “will keep the markets a bit tighter for longer,” Anne-Sophie Corbeau, a gas specialist at Columbia University’s School of International and Public Affairs, told FT.
The head of LNG analytics at Rystad Energy, Kaushal Ramesh, says that Western-aligned investors “could possibly apply for exemptions with phase down dates,” like Japan, which has been authorized to import Russian oil from the Sakhalin 2 project above the price cap.
Arctic LNG 2 is operated by independent Russian LNG producer Novatek. It will feature three LNG trains, with a total annual production capacity of 19.8 million tons. The first train was launched in July, and the other two are scheduled for 2024 and 2025.
Earlier this week, the US assistant secretary of state for energy resources, Geoffrey Pyatt, said that Washington intends to “kill” Novatek’s flagship project. Commenting on the sharp wording, Kremlin Press Secretary Dmitry Peskov urged the international community pay attention to the US plan to dismantle the project.
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