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Russia's Arctic LNG 2 Project Faces Setback Due to US Sanctions

Russia has decried U.S. sanctions targeting the country’s massive Arctic LNG 2 project, saying they are unacceptable and will undermine global energy security. 

Located in the Gydan Peninsula in the Arctic, the LNG project is considered key to Russia's efforts to boost its global LNG market share from 8% to 20% by 2030-2035. 

Russia is the world’s fourth largest LNG producer behind the United States, Qatar and Australia.

"We consider such actions unacceptable, especially in relation to such large international commercial projects as Arctic LNG 2, which affect the energy balance of many states,” Russian Foreign Ministry spokesperson Maria Zakharova told a weekly briefing. 

“The situation around Arctic LNG 2 once again confirms the destructive role for global economic security played by Washington, which speaks of the need to maintain this security but in fact, by pursuing its own selfish interests, tries to oust competitors and destroy global energy security,” the spokesperson continued.  

Foreign shareholders have suspended participation in the Arctic LNG 2 project after the Biden administration announced the new sanctions last month, effectively withdrawing from the financing of the project and for offtake contracts for the new plant. The sanctions are part of the measures implemented by the U.S. and its Western allies that seek to limit Moscow’s financial ability to wage war in Ukraine.

Although the West has adopted 10 packages of sanctions against Russia ever since it invaded Ukraine in 2022, the restrictive measures do not target Russian society, with industries such as food, agriculture, health and pharmaceuticals excluded from the measures imposed. 

However, various economic indicators suggest that the sanctions are having an impact on the Russian economy. Russia’s GDP is expected to contract by as much as 2.5% in the current year after shrinking by 2.1% in 2022. 

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Meanwhile, Russia’s trade in goods and services is expected to decline significantly, with 2023 imports forecast to be higher than in 2022, while exports are forecast to drop further.

By Tom Kool for Oilprice.com 

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  • Mamdouh Salameh on December 27 2023 said:
    Despite all the obstacles including unprecedented sanctions and bans against its energy exports, Russia has always managed very successfully to overcome these obstacles. LNG 2 project will be no exception

    The United States should learn from Russia’s huge Vostok oil project and the success Russian oil giant Rosneft has achieved in discovering huge reserves of oil in the most inhospitable conditions. The US thought that the withdrawal of ExxonMobil from its joint project with Rosneft in the Arctic project under the pressure of sanctions will doom it. But Rosneft developed a home-grown state-of-the-art technology and secured government funds and went ahead with the project achieving a great success.

    There is no doubt that Russian LNG giant Novatek will achieve the same success with its LNG 2 project using home-grown technology and finance.

    In the final analysis, Russia always prevail.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • Mamdouh Salameh on December 27 2023 said:
    Despite all the obstacles including unprecedented sanctions and bans against its energy exports, Russia has always managed very successfully to overcome these obstacles. LNG 2 project will be no exception

    The United States should learn from Russia’s huge Vostok oil project and the success Russian oil giant Rosneft has achieved in discovering huge reserves of oil in the most inhospitable conditions. The US thought that the withdrawal of ExxonMobil from its joint project with Rosneft in the Arctic project under the pressure of sanctions will doom it. But Rosneft developed a home-grown state-of-the-art technology and secured government funds and went ahead with the project achieving a great success.

    There is no doubt that Russian LNG giant Novatek will achieve the same success with its LNG 2 project using home-grown technology and finance.

    In the final analysis, Russia always prevail.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • George Doolittle on December 27 2023 said:
    The USA will end all sanctions once all of Putin Russia becomes the 51st State of by and for the USA and swears allegiance to the same #not_complicated

Leave a comment

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