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Russian Arctic LNG 2 Gas Plant Halts Its Production Following Western Sanctions

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Vlad Litnarovych
Vlad Litnarovych
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Russian Arctic LNG 2 Gas Plant Halts Its Production Following Western Sanctions
A photograph shows the Utrenneye field, the resource base for Novatek’s Arctic LNG 2 project, located in the Gydan Peninsula on the Kara Sea shore line in the Arctic circle, some 2500 km from Moscow on November 30, 2021. (Source: Getty Images)

Russia’s Arctic LNG 2 plant, burdened by heavy Western sanctions, halted its liquefied natural gas (LNG) production as export barriers continue to grow, Bloomberg reports, citing sources familiar with the situation on October 28.

Sanction restrictions from the US and its allies, in response to Russia’s invasion of Ukraine, have blocked Arctic LNG 2 from utilizing specialized ice-class tankers required for the region’s harsh conditions.

Foreign buyers, like India, have also refrained from purchasing Arctic LNG 2’s output, significantly impacting the plant’s operations.

“Commercial liquefaction at the facility was halted,” a source reported, noting that the plant cannot freely move its cargoes to market.

Following the liquefaction halt, gas output from the fields supplying Arctic LNG 2 has dropped sharply, averaging around 5.3 million cubic meters per day in October, down from a September daily average of 12.1 million cubic meters.

Some gas processing continues to ensure that the facility remains operational, albeit at a reduced scale.

Despite beginning exports in August and successfully moving eight shipments of LNG, Arctic LNG 2 has struggled to secure buyers due to sanctions.

The plant relied on conventional gas carriers, some with opaque ownership, to ship its cargoes.

Geoffrey Pyatt, the US State Department’s assistant secretary for energy resources, confirmed that Biden administration will continue “tightening the screws” on Russia’s LNG exports to prevent funding of the war in Ukraine.

Adding to the challenges, Russia recently restricted non-ice-class vessels from traversing the eastern Arctic to Asia due to worsening ice conditions, further narrowing shipment routes until summer when the region becomes passable for regular ships.

With an annual design capacity of 19.8 million tons, Arctic LNG 2 is currently running only one of its planned production units, which has a yearly output of 6.6 million tons.

The plant, managed by major Russian gas producer Novatek PJSC, ramped up production through the summer.

However, without clear access to international markets, its operational future remains uncertain.

Earlier, it was reported that Europe found alternatives to Russian gas by expanding their capacity to import liquefied natural gas from sources like the United States.

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