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Russia’s Novatek recently halted operations at its Arctic LNG 2 project, and it has no plans to restart it this winter, according to an anonymous Reuters source familiar with the matter. The development is a significant setback for the country’s gas ambitions. This project, primarily located on the Gydan Peninsula in the Arctic and majority-owned by Novatek, was supposed to expand Russia’s share in the global LNG market from 8% to an ambitious 20% by 2030. However, facing mounting sanctions from the U.S. and its allies due to the Ukraine conflict, Novatek has suspended its only active LNG train and currently has no plans to restart operations until next summer.
This suspension, which took effect on October 11, reflects the difficulties Arctic LNG 2 faces in finding buyers and securing the specialized ice-class vessels required for winter operations. U.S. sanctions have made potential buyers wary of dealing with Russian LNG due to potential retaliatory consequences. In fact, U.S. Assistant Secretary for Energy Resources Geoffrey Pyatt emphasized that the U.S. is stepping up efforts to choke off Russia’s revenue from LNG sales, citing this as part of a broader strategy to reduce funding for Moscow’s military actions.
While the Arctic LNG 2 project is now on hold, some of Russia’s other LNG operations, such as the Yamal and Portovaya projects, continue to deliver gas to Europe and Asia. This targeted sanction approach has allowed Washington to limit Arctic LNG 2’s influence while maintaining a stable global LNG market.
As of now, several LNG-laden tankers from the Arctic facility are awaiting destinations or storage, adding to the logistical strain and signaling further challenges for Russian LNG amid tightened sanctions.
