March 3, 2024 11:55 pm

Foreign firms freeze work on Russia’s Arctic gas project – media — RT Business News

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The move reportedly follows the latest US sanctions banning countries from buying LNG produced by the plant

Foreign shareholders in Russia’s new liquefied natural gas (LNG) plant, Arctic LNG 2, have halted participation in the project amid US sanctions, Kommersant business daily reported on Monday, citing sources within the Russian government.

According to the report, French TotalEnergies, Chinese CNOOC and China National Petroleum Corp (CNPC), and a consortium of Japanese Mitsui and JOGMEC declared force majeure on their participation in the project, in which they each own a 10% stake. This effectively means that the four shareholders have renounced their responsibilities for financing the plant and fulfilling offtake contracts for the supply of LNG it produces.

This comes after the US Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on Arctic LNG 2 in early November, banning third countries in Asia and Europe from purchasing LNG produced by the plant when it starts operating in 2024. OFAC has set January 31, 2024 as the deadline for closing transactions with the project.

According to a Reuters report last week, Novatek, Russia’s largest independent LNG producer, which owns a controlling 60% stake in the project, sent clients force majeure notices over future gas deliveries from Arctic LNG 2. The notices reportedly warned Novatek clients that the start of exports from the project was at risk of being delayed. Upon receiving the notice, CNOOC and CNPC both reportedly asked the US government for exemptions from sanctions on the plant, warning that restrictions could cause a disruption to crucial gas flows. According to a separate report from Poten & Partners brokerage, the Japanese consortium has also asked for an exemption, but experts say this could take a while.

Commenting on the latest report by Kommersant, JOGMEC said it is analyzing the impact of the sanctions and has neither confirmed nor denied freezing participation in the project. CNOOC was unavailable for comment, and other shareholders have not responded to requests for comment.

Arctic LNG 2 is located in Russia’s Gyda Peninsula. The first train was launched in July. The plant began producing gas last week, and was set to begin commercial LNG shipments in early 2024. After the addition of two more trains in 2024 and 2025, the plant is supposed to reach a full capacity of 19.8 million tons by 2026.

For more stories on economy & finance visit RT’s business section

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Original Source: Foreign firms freeze work on Russia’s Arctic gas project – media — RT Business News

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