Production began this month at the Novatek-led Arctic LNG-2 export terminal in Russia’s remote Gydan Peninsula – a project set to expand the country’s LNG output by 60% at full capacity. Moscow views the expansion of LNG exports as critical, especially in light of steep cuts to Russia’s gas pipeline supplies to Europe over the past two years, and has maintained a target of seizing a 20% share of the global market for the super-chilled fuel by 2035. And Arctic LNG-2’s successful development is the next step in realising this goal. 

The launch of Arctic LNG-2’s first of three liquefaction trains occurred more or less on time, despite Western sanctions and other fallout related to the conflict in Ukraine. But how much it actually exports, and how quickly its second and third trains will be completed, is another matter. The US imposed another round of sanctions on the Russian energy sector in November last year, targeting Arctic LNG-2 specifically. This has forced the venture’s foreign shareholders, including France’s TotalEnergies, to freeze their participation and renounce their responsibilities for financing and offtake contracts, according to a report by Kommersant in late December. In other words, that not only imperils how much gas that project can sell in the near term, but also the development of its other trains, especially as previous sanctions have blocked the supply of Western equipment and technology for the plant.

At full capacity, Arctic LNG-2 will export 19.8mn tonnes per year (tpy) of LNG. This capacity should be reached after its second and third trains are commissioned in 2024 and 2026 respectively. Novatek and its partners took a final investment decision (FID) on developing the plant in 2019. Novatek maintained a 60% interest, while TotalEnergies, Chinese firms CNPC and CNOOC, and a joint venture between Japan’s Mitsui and JOGMEC, each took 10% stakes.

If you’d like to read more about the key events shaping the former Soviet Union’s oil and gas sector then please click here for NewsBase’s FSU Oil and Gas Monitor.

©2024 bne IntelliNews , source Magazine