Russia’s major Arctic gas project stalls due to sanctions

The Arctic Liquified Natural Gas (LNG) 2 project, a major Russian energy initiative, has come to a halt due to Western sanctions that complicate the transportation and sale of raw materials, Bloomberg reports, citing sources.

“Commercial liquefaction at the facility was halted due to high inventories as the plant cannot freely export cargoes,” the text reads.

Located near the Arctic Circle, the plant has faced multiple waves of Western sanctions imposed last year. The production slowdown saw gas extraction drop to approximately 5.3 million cubic meters per day this month – less than half the volume produced in September.

“The restrictions imposed by the US and its allies over the Kremlin’s invasion in Ukraine restricted Arctic LNG 2’s access to ice-class tankers built for the project in South Korea and made foreign buyers reluctant to purchase the cargoes,” the text reads.

Despite beginning shipments of liquefied gas in August using conventional tankers, whose owners are often unknown, none of the eight shipments have been sold, even with discounts.

Some gas processing is necessary to keep LNG facilities operational, even without commercial production. Earlier this year, Arctic LNG 2 processed small volumes of gas before loading began on tankers.

The Arctic LNG 2 project is designed for an annual capacity of 19.8 million tons; however, currently, only one production line is operational, capable of producing 6.6 million tons per year. 

“The facility has been ramping up its natural gas production and liquefaction in summer and in August, with the start of exports, the volumes reached the highest so far this year,” Bloomberg reports.