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Media: Foreign companies exit major Russian LNG project due to sanctions

Foreign shareholders in Russian Arctic LNG-2 project, including TotalEnergies and Chinese firms, declare force majeure and suspend involvement, prompted by US sanctions on Russia’s Novatek, Russian media says.
byYuri Zoria
26/12/2023
2 minute read
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Russia's Arctic LNG-2 facilities.
Russia’s Arctic LNG-2 facilities. Photo: flenco.com
Media: Foreign companies exit major Russian LNG project due to sanctions

Foreign shareholders in the Russian Arctic LNG-2 project, including TotalEnergies of France, China's CNPC and CNOOC, and a consortium comprising Japan's Mitsui and JOGMEC, have declared force majeure, resulting in a suspension of their involvement in the project, Russian internet newspaper The Bell reports.

The foreign shareholders, collectively holding a 40% stake in the project, invoked force majeure clauses in their contracts, prompted by Russia's Novatek's recent announcement. This decision came in response to the sanctions imposed by the United States, according to The Bell.

Effectively, the foreign partners have relinquished their financial commitments, potentially leaving Novatek to shoulder the project's financing independently. This development complicates Arctic LNG-2's efforts to secure gas sales, financing, and deliveries, jeopardizing its long-term LNG export agreements. Moreover, Arctic LNG-2 may be compelled to sell gas on the spot market.

Additionally, Russia is grappling with a pressing concern regarding ice-class tankers crucial for LNG exports under this project. The Zvezda shipyard is experiencing delays in tanker deliveries owing to equipment-related issues.

In November, referring to anonymous sources, The Financial Times reported that the US was 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.

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