The Arctic LNG 2 expansion has been delayed until 2028 amid sanctions pressure

Russian company Novatek has again hit a snag with its Arctic LNG 2 project, delaying the start of the third line from 2026 to 2028, according to RBC Media. This delay is a direct consequence of Western sanctions imposed due to Russia’s ongoing conflict with Ukraine. These sanctions have significantly restricted Novatek’s access to vital equipment and ice tanks, which are critical to the operation of the project in arctic glacial conditions.

Arctic LNG 2 was poised to be a game-changer for Russia’s LNG ambitions, with plans to produce 19.8 million metric tons of LNG annually and 1.6 million tons of stable gas condensate. However, the challenges have increased. Just last month, Novatek was forced to cut gas production, signaling deeper problems in maintaining production levels under the current sanctions regime.

These sanctions not only hindered Novatek’s ability to secure gas carriers, but also forced the company to reconsider the entire scope of the project. Earlier reports suggested that Novatek might focus on the ice-free port of Murmansk, where logistics are less daunting.

Despite these setbacks, Novatek insists on moving forward with the third line, albeit delayed. The Russian government’s broader strategy to increase its share of the global LNG market to 20% by 2035 is increasingly at risk. Russia currently holds about 8 percent of the market, and any further delays could jeopardize its long-term goals.

In response to these challenges, Russia has expanded its “dark fleet” of tankers to evade LNG sanctions, a clear indication of how far Moscow is willing to go to support its energy ambitions.

By Julianne Geiger for Oilprice.com

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