Novatek is reportedly considering scaling back its Arctic liquefied natural gas (LNG) 2 project in Siberia as sanctions limit access to essential ice-class tankers, reported Reuters.
Sanctions resulting from Russia’s involvement in Ukraine have impacted Arctic LNG 2, leading to foreign shareholder withdrawal and a force majeure declaration by Novatek. The company has struggled to secure the necessary ice-class gas carriers because of these sanctions.
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As a result, the company is shifting focus to its Murmansk project, which would benefit from ice-free port access in the Barents Sea.
This development could hinder Russia’s plan to increase its global LNG market share to 20% by 2035 from the current 8%.
Arctic LNG 2 aims to produce 19.8 million tonnes per annum (mtpa) of LNG and 1.6mtpa of stable gas condensate from three trains.
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However, the project has struggled with delays and equipment shortages.
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By GlobalDataThe first LNG production from the Arctic LNG 2 commenced in December 2023 but the delivery of super-cooled gas has been behind schedule.
Sources indicate that LNG production at Arctic LNG 2’s first train has been suspended. The second and third trains are scheduled for launch in 2024 and 2026, respectively.
The third train could be repurposed for the Murmansk LNG project, which has a larger projected output as well as the advantage of an ice-free Barents Sea port.
A source familiar with the plans said: “An option being considered is to send a second gravity platform for Arctic LNG-2 in the summer, and to use a third one for Murmansk LNG.”
The Murmansk LNG project is expected to surpass Arctic LNG 2’s production with an annual capacity of 20.4mtpa. Its first two trains are set to begin by 2027, with the final train operational by 2029.
“All attention now is on Murmansk, the ice-class tankers are not necessary there,” a source said.
TotalEnergies, a stakeholder in Arctic LNG 2, confirmed that the third train is on hold, although the second train is likely to proceed.
