Reuters Sources Say Russian Novatek Is Issuing LNG Force Majeure Notices

Unnamed industry sources told Reuters on Thursday that Russian LNG giant Novatek has issued force majeure on future Arctic LNG 2 supplies for some clients following November sanctions by Washington. 

Russian Novatek is set to launch first production in a matter of days or weeks on its 19.8-million-metric-ton-per-year Arctic LNG project, which is also slated to produce 1.6 million tons of gas condensate annually. 

While four anonymous industry sources told Reuters some clients had been issued force majeure notifications, Novatek did not comment to the news agency. 

One of Reuters’ sources identified the clients as Spanish Repsol and Chinese Shenergy Group and Zheijang Energy. However, Repsol told Reuters it had not received any notification and the Chinese companies have not confirmed the report. 

In early November, when the U.S. slapped sanctions on Arctic LNG 2, Russia shrugged off the implications, dismissing the move as a desperate attempt to keep international gas prices high. 

The $25-billion Arctic LNG-2 project is Russia’s second major LNG project, and the new sanctions prohibit all related transactions without a special license from OFAC until 31 January 2024. 

At the time, Interfax quoted Leonid Mikhelson, the founder of Novatek–Russia’s largest private gas group–as describing U.S. sanctions as “high praise for our professionalism” and designed to benefit North American LNG players looking to drive prices higher. 

Novatek has a 60% interest in the project, with TotalEnergies and Chinese companies CNPC and CNOOC each holding 10%, along with 10% for a separate consortium of Japan’s Mitsui and JOGMEC. TotalEnergies also owns an additional 21.% in the project through its shareholding Novatek. 

In the last week of November, Politico reported that the European Union was not planning any new sanctions designed to target Russian LNG, noting that Moscow earned over 6 billion euros in 2023 so far from EU purchases. 

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com:

• Oil Prices Poised to Bounce Back in 2024
• Putin Orders Asset Seizures From Austrian and German Energy Giants
• Clean Energy Bulls Finally Have Reason To Be Positive