Russia delivers LNG directly to storage as sanctions

Russia has started delivering LNG from its flagship Arctic LNG 2 project, but not to customers.

Deliveries have been made from the Arctic project to floating storage facilities, either in Russia or in European waters, as potential customers are unwilling to buy LNG from the facility, which has been under tightening Western sanctions in recent months, the Financial Times reported on Thursday . , citing data from ship tracking providers.

Located on the Gydan Peninsula in the Arctic, Arctic LNG 2 has been seen as key to Russia’s efforts to increase its global LNG market share from 8% to 20% by 2030-2035.

But the project has come under increasingly intense sanctions from the United States, which have put off all buyers who were previously considering buying cargo from Arctic LNG 2.

The project has already experienced months of delays after initial US sanctions in November 2023 changed the company’s plans to start production and export timelines.

However, Russia has begun amassing a shadow fleet of tankers to ship its LNG in vessel ownership transfers similar to moves Moscow began after its invasion of Ukraine to create a shadow fleet to export oil and products to the face of Western sanctions.

Some oil tankers have recently left the sanctioned terminal in northern Russia, signaling Moscow’s continued efforts to circumvent Western restrictions.

Last month, the US State Department stepped up efforts to derail Russian Arctic LNG 2 exports, targeting companies involved in the development of the project and ships found to have loaded LNG from the facility.

The US State Department said in August that it “took new steps to sanction entities that support the development of Russia’s Arctic LNG 2 and other future energy projects.”

The department has designated several companies related to the Arctic LNG 2 project to further disrupt the project’s ability to produce and export LNG, as well as the project’s ability to acquire critical LNG carriers. These designations include entities involved in the illicit loading of LNG from Arctic LNG 2 in early August.

Three vessels – Pioneer, Asya Energy and Everest Energy – are LNG carriers targeted by the new sanctions, as are their registered owners Zara Shiphoding and Ocean Speedstar Solutions.

By Tsvetana Paraskova for Oilprice.com

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