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FT: US tries to strangle key Russian LNG project with sanctions

The US targeted Russia’s liquefied natural gas exports for the first time, blocking the $21 billion Arctic LNG 2 project set to begin shipping fuel in 2024.
Yamal LNG. Credit: LNG Prime
FT: US tries to strangle key Russian LNG project with sanctions

The United States is directly targeting Russia’s ability to export liquefied natural gas (LNG) for the first time, in an attempt to strangle one of the Kremlin’s most important energy projects, the Financial Times reported on 12 November.

While European countries continued importing Russian LNG even after Moscow’s full-scale invasion of Ukraine in 2022, the US has sought to avoid disrupting flows so as not to increase pressure on allies battling an energy shortage – until now.

“The State Department sanctioned Russian Arctic LNG 2 in early November, blocking European and Asian countries from buying the gas when the project starts producing next year,” the FT reports, citing unnamed US officials, lawyers and analysts.

Arctic LNG 2 is led by Russian private company Novatek. This represents the first time LNG supplies themselves have been directly affected, the report states.

The $21 billion project on the Gydan Peninsula in the Russian Arctic would export to both Europe and Asia. At full production, it would account for a fifth of Russia’s goal of producing 100 million tonnes of LNG annually by 2030. It was expected to begin shipping in the first quarter of 2024.

The US has not directly targeted Russia’s other major LNG projects, Yamal LNG and Sakhalin 2, which are currently shipping fuel to Europe and Asia.

While the EU has not imposed sanctions on Russian LNG, European nations “bought record amounts of Russian LNG in 2022,” according to the FT.

The recent report of the Institute for Energy Economics and Financial Analysis showed that from January to September 2023, Spain and Belgium doubled their LNG imports from Russia compared to the same period in 2022. Meanwhile, France increased its Russian LNG imports by 40%. Approximately 27% of the LNG imported by Spain over this period came from Russia, and Belgium relied even more heavily on Russia, receiving 37% of its LNG from Russia.

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