Russia foils western sanctions on natural gas project as shipments near
WORLD 21 February 2024 - 19:57
A Russian liquefied natural gas project subject to US sanctions is close to exporting its first cargo after Chinese expertise filled the technical and logistical void left by western companies.
The shipment shows how Russia has been able to bolster its energy industry with Beijing’s help, despite western attempts to kill the project and cripple Russia’s LNG ambitions, The FT reports.
The US placed Arctic LNG 2 under direct sanctions in November, in effect blocking its allies from buying the project’s gas when it starts production. The move followed an EU ban on the transfer of LNG-related technology to Russia in April 2022, two months after Moscow launched its full-scale invasion of Ukraine.
Arctic LNG 2 is key to Russia’s energy strategy, with the project’s potential success likely to trigger further investment in similar schemes. It also illustrates China’s growing role both as Russia’s main equipment supplier and its largest buyer of LNG.
“In terms of the construction . . . the sanctions, I don’t think have worked,” said Ben Seligman, a project specialist for Arctic oil and gas development. Russia has been “able to complete the first production line with just minor modifications and they have a solution for the second”, he said.
Arctic LNG 2, in the Gydan peninsula of northern Siberia, serves the Asian and European markets. The project is majority-owned by private Russian group Novatek, with France’s TotalEnergies, two Chinese companies and a Japanese joint venture each holding stakes of 10 per cent.
The super-chilled fuel has grown in importance for the Kremlin because of the loss of pipeline exports to Europe.
When Arctic LNG’s three production lines or “trains”, which convert natural gas to LNG, are complete, the project will have an annual production capacity of 19.8mn tonnes and contribute significantly to Moscow’s prewar output target of 80-140mn tonnes by 2035.
Production from the first Arctic LNG 2 train started in December, and industry sources and traders have suggested that the project could ship its first cargo in the next few weeks. Novatek had previously signed supply contracts with Zhejiang Energy Gas Group and Shenergy Group of China.
“Arctic LNG 2 is a ‘litmus test’,” said Alexander Kislov, an independent analyst who previously worked in LNG research for a large Russian energy company. “Further investment decisions [on other Russian LNG projects] will depend on the success of its launch,” he added.
After EU sanctions targeted the transfer of LNG technology, a key stumbling block was the procurement of turbines to liquefy gas and power the site, said Mehdy Touil, an LNG operations specialist who worked on Novatek’s Yamal LNG project, also in Siberia.
Harbin Guanghan Gas Turbine stepped in to provide the remaining turbines required to operate the first train after a US company withdrew from a contract to provide 21 turbines for all three trains, according to a source confirming multiple media reports. Separately, the Harbin city government in December said China State Shipbuilding Corporation, Harbin Guanghan’s parent, sold 20 turbines to a “Russian company”.
A former Russian petrochemicals executive said “of course Chinese turbines are inferior to German or French ones”, but they were an “acceptable replacement”.
Beijing has an incentive for supporting such projects in Russia after becoming the biggest importer of Russian LNG last year. “Chinese support is a key element in the success of this project,” Touil said.
Five Chinese companies were responsible for fabricating much of the first and second LNG plants, Novatek documents show.
There have been 12 voyages from Chinese yards to ports in the north-west Murmansk region since the introduction of EU sanctions, according to data company Kpler. Experts said most were likely to have delivered equipment that is assembled on to a floating structure, then towed to Gydan. The second line could start production by year-end, they added.
Malte Humpert, a reporter with publication High North News that specialises in Arctic coverage, said: “Western companies were forced to pull out but Chinese companies could step in. It shows the influence and how much replacement technology China can provide.”
As the west curtails supplies, China has become a crucial source of hardware, electronics and other goods for Russia. Trade data shows that the country’s exports to Russia in 2023 rose 47 per cent from the previous year to $111bn.
While sanctions have failed to halt the project’s development, experts believe they could be more successful in blocking sales.
Foreign shareholders that were set to take LNG from the project, suspended participation in Arctic LNG 2, Russian newspaper Kommersant reported in December, with Total confirming the decision in January.
Novatek lacks the “ice-class” vessels for Arctic LNG 2 that are capable of navigating challenging Arctic routes to export markets, said Kislov.
He added that the company had yet to receive any of the 21 carriers ordered from shipbuilders. Even if it does receive the vessels, US sanctions have also been imposed on storage facilities that Novatek had planned to use to transfer LNG from the ice-class vessels to regular carriers.
But Seligman said Novatek would probably “find some kind of a workaround” to enable Arctic LNG 2 exports.
Western allies would then have to find “more creative ways” to restrict Russia’s flagship LNG project, he added.
Caliber.Az
1
|
Phantom arms deal: How false claims aim to derail Baku-Tehran diplomacy Azerbaijan embraces "forewarned is forearmed" principle
25 July 2024 - 15:34
|
2
|
Could France’s anti-NATO rhetoric trigger domestic turmoil? Leftist Mélenchon's stance sparks historical echoes
24 July 2024 - 10:24
|
3
|
Azerbaijan: The new powerhouse of aluminium production amid global market strain "Green" era's requirement
25 July 2024 - 17:05
|
4
|
Brussels' bait and Yerevan's rush to swallow it The visa-free temptation
24 July 2024 - 09:00
|
5
|
West-backed Armenia likely to spark conflict with Azerbaijan rather than seek peace Caliber.Az reveals expert prognoses
25 July 2024 - 11:10
|
Japan addressing increasing incidents of customer harassment
Service culture under strain27 July 2024 - 03:05
Swiss spots struggle with social media-driven visitor impact
Tourism vs. nature27 July 2024 - 01:03
German chancellor tackles EU expansion, internal reform challenges
Path forward26 July 2024 - 23:03
Italian newspaper explores Azerbaijan's ancient Albanian churches
26 July 2024 - 21:08
Azerbaijani prosecutor general declares ties with Türkiye as strategic partnership
PHOTO26 July 2024 - 20:55
Azerbaijan, Italy strengthening military relations
PHOTO26 July 2024 - 20:42
China demands withdrawal of US nuclear weapons from Europe
26 July 2024 - 20:29
Pentagon concedes to spreading anti-Sinovac propaganda in Philippines
26 July 2024 - 20:16
COP29 presidency team hosts events to tackle key climate agenda issues
26 July 2024 - 20:03
Israel targets Türkiye’s TRT Haber team covering Al-Aqsa mosque incident
26 July 2024 - 19:51
COP20 president: Azerbaijan should lead with ambition at COP29
26 July 2024 - 19:38
Turkish defence minister, Azerbaijani ambassador discuss strengthening military ties
26 July 2024 - 19:25
FBI seeking to interview Trump as part of assassination attempt investigation
26 July 2024 - 19:12
US presidential candidate cites potential path to victory with Biden out of race
26 July 2024 - 18:58
Turkish MP confirms plans for official Azerbaijani school in Istanbul
26 July 2024 - 18:44
US vice president’s call for peace in Gaza sparks controversy with Israel
26 July 2024 - 18:30
FM: Italy to appoint ambassador to Syria after 10 years
26 July 2024 - 18:17
Head of Georgian Parliament blames opposition for compromising national safety
Aid to Ukraine at Georgia’s expense26 July 2024 - 18:03
South Caucasus on edge: West fuels Armenia's war drums
Yerevan clings to deceitful rhetoric26 July 2024 - 18:02
Media: Iran arms Hezbollah with advanced weapons
26 July 2024 - 17:49
Bolsonaro intends to run for Brazilian presidency in 2026, citing confidence in winning
26 July 2024 - 17:36
Armenian PM visits modernised Margara checkpoint on Turkish border
VIDEO26 July 2024 - 17:22
Boeing considers to convert its top fighter into an electronic warfare jet
Caliber.Az on YouTube26 July 2024 - 17:17
Belarus ready to expand cooperation with North Korea
26 July 2024 - 17:09
EU appoints new special representative for South Caucasus
26 July 2024 - 17:01
Azerbaijani-Chinese partnership defies "first among equals" attitudes
Rising above geopolitical cynicism26 July 2024 - 16:55
Armenia's militarization: A "peace agenda" with an armed approach
Yerevan must revisit recent historical lessons26 July 2024 - 16:42
Azerbaijan approves cooperation pacts with Türkiye, Kazakhstan
26 July 2024 - 16:33
Media: US informs Iran of readiness to return to nuclear deal
26 July 2024 - 16:29
Turkish forces take down PKK terrorists in coordinated Iraq and Syria raids
VIDEO26 July 2024 - 16:16
Israeli air strikes hit Hezbollah outposts in response to rocket fire
26 July 2024 - 16:03
Kremlin spox: EU ridicules Orban over Moscow visit
26 July 2024 - 15:51
Armenian parliamentary delegation visits Georgia to strengthen bilateral ties
26 July 2024 - 15:38
Washington talks peace while arming Yerevan
26 July 2024 - 15:38
Travellers from 13 nations explore rebuilding of Karabakh, East Zangazur
PHOTO26 July 2024 - 15:25
European Commission transfers €1.5 billion from frozen Russian assets to aid Ukraine's defence
26 July 2024 - 15:25
Trump says US to destroy Iran in case of his assassination
26 July 2024 - 15:12
Kremlin declares dialogue with West futile amid hostility toward Russia
26 July 2024 - 14:59
Somalia, Azerbaijan share common positions on many international forums
Minister’s statement26 July 2024 - 14:46
Azerbaijan promoting tourism potential in India
PHOTO26 July 2024 - 14:33