Russia’s LNG goals undermined as key facility faces operational decline

Activity has sharply declined at Russia's only construction yard for liquefied natural gas (LNG) modules, signalling the impact of Western sanctions on the country’s ambitions in the energy sector.

The Belokamenka facility, operated by Novatek PJSC on the Barents Sea and known as "the plant to make LNG plants," appears to have been largely mothballed, Caliber.Az reports referencing foreign media.

Recent satellite observations from the Earth Observation Group at the Payne Institute for Public Policy in Colorado reveal that night-time light intensity at the plant during late October and early November was the lowest recorded since 2019.

Initially designed to serve as a hub for assembling LNG trains — modular processing plants that convert natural gas into its liquid form — the facility has only completed two trains for the Arctic LNG 2 project, Russia's newest export facility. There is currently no sign of activity necessary for further capacity expansion, largely due to U.S. and European sanctions aimed at limiting Moscow’s energy revenue following its invasion of Ukraine.

Western powers have imposed restrictions on Novatek and its future LNG projects, which include production facilities, trans-shipment sites, and tankers. Dr. Mikhail Zhizhin, an EOG researcher with extensive experience in remote sensing, noted, “The average brightness of electric lights at the facility has fallen by 75% compared to 2021 to 2023,” indicating a significant drop in industrial activity at Belokamenka.

Novatek did not respond to a request for comment from Bloomberg regarding the current operational status of the facility. Instead of constructing LNG production facilities from scratch in the harsh Arctic environment, Novatek opted to assemble them in more temperate conditions near the port of Murmansk. The Belokamenka yard successfully built the first two trains for Arctic LNG 2, each consisting of 14 modules on a massive floating gravity-based platform. Once completed — one in July 2023 and the other this year — the trains were towed approximately 1,500 nautical miles across the Northern Sea Route to the Gydan peninsula, a journey that took about three weeks.

While one of the trains was producing LNG until early October, Western sanctions severely hampered shipping and sales, effectively shutting down operations at the facility. A third train, which remains only partially constructed, is still at Belokamenka, and reports from Russia’s RBC newspaper in August indicated that Novatek is planning to wind down operations at the site through 2025 to early 2026.

Satellite technology has monitored night-time surface lights globally since the 1970s, providing valuable data on industrial activity, population movements, and economic trends. This method allows for a granular analysis of specific facilities, such as lumber mills in British Columbia.

Data from the Payne Institute show that light intensity at Novatek’s yard peaked from 2022 to 2023, coinciding with the construction of the two LNG trains for Arctic LNG 2. The subsequent reduction in lighting indicates a halt in construction activities at the site, representing a significant setback for Russia’s goal of capturing up to 20% of the global LNG market over the next decade.

Laura Page, a natural gas and LNG analyst at research firm Kpler, pointed out that future Russian LNG projects were also expected to utilize the Belokamenka construction center for pre-assembling modules. The lack of activity at the facility suggests delays in these critical projects, which are essential for Russia's energy strategy.

By Tamilla Hasanova