The Russian Arctic LNG 2 Project Targeted by U.S. Sanctions
12.26.2023 By Tank Terminals - NEWS

December 26, 2023 [Reuters]- Japan’s Mitsui and Co 8031.T has decided to pull its employees out of Russia’s Arctic LNG 2 liquefied natural gas (LNG) project, the Sankei newspaper reported on Tuesday, citing several sources, in yet another blow for the project.


Fearing the backlash from the sanctions, foreign shareholders suspended participation in the project, renouncing their responsibilities for financing and for offtake contracts for the plant, the daily Kommersant reported on Monday.

Sanctions have also resulted in Novatek declaring force majeure over LNG supplies from the project, industry sources told Reuters last week.

Following are some facts about the Arctic LNG-2 project:



The plant is located on the Gydan Peninsula in the Arctic and will have three operational lines with a capacity of 6.6 million metric tons of liquefied natural gas (LNG) each.

Novatek, Russia’s largest LNG producer, plans to start production by the end of this year. The second and third lines are due to start operations in 2024 and 2026 respectively.

Arctic LNG-2 would be Russia’s third large-scale project for producing LNG after a Gazprom (GAZP.MM)-led Sakhalin 2 plant in Russia’s Pacific and Yamal LNG controlled by Novatek.



Arctic LNG-2 is led by Novatek (NVTK.MM) which holds a 60% stake. Other shareholders include French energy major TotalEnergies (TTEF.PA), China’s CNPC and CNOOC Ltd (0883.HK) as well as Japan Arctic LNG – a consortium of Mitsui & Co, Ltd. (8031.T) and JOGMEC – each holding a 10% stake.

Investors will be able to sell LNG in accordance with their shares. Novatek will have the right to sell 11.9 million tons of LNG per year from the project. Other shareholders will be able to sell around 2 million tons each.



Investments are valued at up to $21 billion.

Novatek had initially planned to raise some 9.5 billion euros ($10.11 billion) in project financing from both Russian and foreign banks.

But after Moscow started what it calls its special military operation in Ukraine in February 2022, international banks and shareholders halted financing due to sanctions.


Arctic LNG-2 has a licence for LNG exports from Russia.

As of early November, according to public information, Novatek has secured 4.3 million tons of LNG sales per year.

Novatek and India’s Deepak Fertilisers and Petrochemicals Corporation signed a non-binding memorandum of understanding (MoU) on the supply of LNG and low-carbon ammonia in February 2023. No sales volumes have been disclosed.

In January 2022, Novatek signed a deal with China’s ENN Natural Gas to supply around 0.6 million tons of LNG per year for 11 years.

In June 2021, Novatek and Glencore (GLEN.L) signed an agreement on long-term LNG supplies of 0.5 million tons per year to terminals in Eastern Asia.

In June 2021, Novatek and China’s Zhejiang Provincial Energy Group signed an agreement, which built on an MoU signed in October 2019 and established key commercial terms for annual supply of up to 1 million tons of LNG from the Arctic LNG-2 project for a term of 15 years.

In February 2021, Novatek Gas & Power Asia agreed with China’s Shenergy Group to supply about three million tons of LNG over a duration of 15 years, or about three LNG cargoes a year.

In April 2019, Novatek and Vitol signed an agreement which may result in a 15-year deal on supplies of 1 million tons of LNG per year.

In April 2019, Novatek and Repsol signed an agreement, which may open up the possibility for a 15-year deal on supplies of 1 million tons of LNG from Arctic LNG 2 and other Novatek projects.

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