Russia is adamant that it will press on with its grand scheme of increasing LNG production despite U.S. sanctions on a major project, Russian Foreign Ministry spokeswoman Maria Zakharova said on Thursday.
While the United States moved to squeeze Moscow further by adding another package of sanctions that targeted a company heavily involved in the $25 billion Arctic LNG-2 project, Russia has no intention of relaxing its plans to boost LNG production to 100 million tons per day.
Referring to Novatek-led Arctic LNG-2, Zakharova said on Thursday that "No one in our country is going to abandon large-scale plans for this project or for similar projects. The development of LNG infrastructure is our priority in the energy sector."
According to Zakharova, Russian companies have already learned how to not let those sanctions get in the way of development. Russia has plans to account for 20% of the global LNG market by 2035, up from its current 8% share.
The U.S. State Department said earlier that the Biden Administration was working with U.S. allies on the Arctic LNG-2 sanctions, with the deadline for winding down transactions relating to the project coming up soon, in January. It was this announcement that likely sparked Russia's affirmation that it would not be deterred from its LNG ambitions.
The project, in which TotalEnergies, CNOOC, CNPC, and others own a stake, is set to kick off production by the end of this year. TotalEnergies said earlier in the week that it was currently assessing the "consequences" of the Arctic LNG 2 SDN-entity designation by the United States. The oil giant has already written off $15 billion in assets due to the sanctions on Russia.
Novatek's executive chairman, Leonid Mikhelson, accused the Biden Administration earlier in the week of imposing sanctions to keep LNG prices high, benefiting local LNG producers that struggle with higher production costs.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
Comments
Working with a highly innovative and successful Russian LNG company Novatek, nothing could stop it achieving its objectives. Russia has the finance and technology to achieve its goals without Western finance and technology. Therefore, neither Western sanctions against its Arctic LNG-2 project nor withdrawal of any Western companies from the project could affect its goals.
Moreover, Russia’s LNG exports will benefit from lower shipping costs and shorter shipping times by using the Northern Sea Route (NSR) from the Arctic to China and Europe thus making them highly competitive in the global LNG market.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert