For the construction of the second stage of Arctic LNG 2, which was the subject of direct US sanctions, the first sections of the power plant were supplied from China. Washington has not yet responded to the operation. Experts believe that if Donald Trump wins the US presidential election, it is unlikely that changes in the sanctions policy can be expected.
“Russia has taken an important step towards commissioning the second production line of the country’s flagship project for the production of liquefied natural gas, Arctic LNG 2. Despite current US sanctions aimed at reducing the flow of materials from Chinese shipyards, the first sections of the 650 MW power plant arrived in the Russian Arctic last weekend.” – gCaptain reports.
According to the publication, the semi-submersible heavy transporters Ocean 28 and Nan Feng Zhi Xing brought a substation and the first of four power units to Murmansk. The second is expected next week aboard the Hunter Star. gCaptain’s information is supported by the ship’s AIS data.
“Another two units remain at Wison New Energies’ Zhoushan shipyard awaiting delivery during next year’s shipping season. In the final configuration, the plant will contain 24 Harbin Guanghan CGT30 turbines with a total capacity of about 650 MW,” the publication continues.
Earlier this year, Wison New Energies attempted to supply contracted modules for the final and third stages of Arctic LNG 2. But it recalled the cargo for fear of sanctions. The heavy trucks carrying the modules fell beneath them.
gCaptain sources said the successful delivery of power plant units for Phase 2 without any sanctions action could lead Wison to try again to deliver modules for Phase 3 of the project this winter. For now, the modules remain aboard the heavy tanker Wei Xiao Tian Shi, which is in the South China Sea.
The completion of the second stage with the help of a Chinese plant will increase LNG production in Russia by another 6.6 million tons (9.1 billion cubic meters) per year. The Arctic LNG 2 project should become the third major LNG project in Russia, with a capacity of about 20 million tons (27 billion cubic meters of gas) per year. While the government plans to increase the production of liquefied gas until 2035 almost three times, up to 100 million tons per year.
In November 2023, the United States imposed direct sanctions on Arctic LNG 2 and promised to deal with all subsequent projects, introducing sanctions from time to time on oil tankers and companies that continue to participate in the sanctioned project.
The delivery of sections of power plants occurs during the US presidential elections, in which Donald Trump wins. Experts, however, do not expect a change in US sanctions policy with his return to the White House.
“As for any fundamental and official changes in US sanctions policy, including on LNG, I would not bet on quick decisions, regardless of the outcome of the elections. First of all, this is a minor issue for them and even more so for the new administration. Second, the United States has deep-seated interests in limiting competition, which means that the removal of barriers will be the subject of negotiation on a wide range of issues.” — says the deputy director of the National Energy Security Fund (NESF) Alexey Grivach.
Leading analyst at FNEB and expert at the Russian Government Financial University Igor Yushkov points out that lifting sanctions in the United States is quite difficult and Trump will support American export projects.
“Therefore, it will eliminate competitors from the gas market. The United States has an established position on Russian LNG projects and this is unlikely to change. The fact that someone has not been sanctioned does not mean anything, as this may happen in the next update of the sanctions lists.” – points out the expert.
The delivery of the power plant for the second stage will allow the second stage of the Arctic LNG 2 to be commissioned, but so far no one has purchased a single batch of the first stage launched last December due to problems with transportation and sales, adds Igor. Yushkov.
“There are not enough tankers to remove everything, at least from the first stage. There are no ice class tankers. Novatek has not yet found ways to sell licensed LNG. That is why they will not launch the second stage yet.” – believes the expert.
Shipments from Arctic LNG 2 began in August. But so far cargo has been delivered to floating storage facilities near Murmansk and Kamchatka or stored on gas carriers. The sanctioned tankers are parked in the Barents Sea or near Vladivostok, according to AIS data from the vessels.
Chief strategist of the investment company “Vector Capital” Maxim Judalov sees in Trump’s logic a desire to increase the volume of trade with China and, above all, in energy resources.
“Therefore, he has no intention of easing pressure on Russian LNG, but he is also unlikely to want to additionally quarrel with China on the eve of trade balance negotiations. “In the current situation, the US strategy of bullying before negotiations and then making concessions is not working well, because the financial stability of the US government is in great doubt.” – notes Maxim Khudalov.
FNEB Deputy Director Alexey Grivach does not rule out that, quite possibly, after a while potential buyers will try to test the Americans’ commitment to the old line of behavior regarding Arctic LNG 2 and try to accept the shipment. But it’s too early to talk about this.
Meanwhile, two large-scale LNG plants, Yamal LNG (17.4 million tons) and Sakhalin-2 (9.6 million tons), and the medium-tonnage Baltic plants Portovaya (1.5 million tons) continue to operate in Russia. million tons) and Cryogas. 660 thousand tons). Liquefied gas is supplied to Europe and Asia and the projects are not subject to US sanctions.
At the same time, its benefit from budget revenues is much lower than that of the gas pipeline, since LNG projects in the Arctic have significant tax benefits.
“It really is. But Arctic LNG 2 is the only oil and gas project operating in Russia and is subject to US blocking sanctions. That is to say, there is an element of demonstrativity and informational noise on the part of the promoters of the sanctions.” – notes the deputy director of the FNEB, Alexey Grivach.
