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Russia's Seaborne Oil Exports Plunge

Russia's Seaborne Oil Exports Plunge

Russia’s crude oil exports have plunged to…

Russia’s Novatek Looks to Market LNG in China

Russia’s natural gas producer Novatek is offering liquefied natural gas to potential Chinese customers through a new marketing team, although it’s uncertain whether the Russian company would attract many clients with attractive prices, Chinese traders told Reuters on Wednesday.

Novatek is now offering part of an LNG cargo from its majority-owned Yamal project in the Arctic. The cargo is set to arrive in China later in July, the China-based trading sources told Reuters. 

However, traders doubt the Russian company would see profitable margins from LNG trade in China, where pipeline gas supply from Russia is growing, while major LNG importers own shares in the import infrastructure.

Novatek doesn’t have any foothold in China’s import terminals or gas distribution network.

Earlier this year, Novatek was said to be opening an office in China and creating a team based there to sell gas.

Novatek, which is the biggest LNG producer and exporter in Russia, has been working to set up a marketing and business development team based in China for months, according to multiple undisclosed sources who spoke to Reuters in February.

Unlike the Yamal project which sells LNG cargoes to Asia and even to Europe, Novatek’s new Arctic LNG 2 project has been basically on ice since the U.S. imposed in November fresh sanctions on the Russian project.

Located in the Gydan Peninsula in the Arctic, the Arctic LNG 2 project was considered key to Russia’s efforts to boost its global LNG market share from 8% to 20% by 2030-2035.

However, foreign shareholders suspended participation in the Arctic LNG 2 project after the Biden Administration announced the new sanctions, effectively withdrawing from the financing of the project and for offtake contracts for the new plant.

The EU added insult to injury last month as it banned new investments, as well as the provision of goods, technology, and services for the completion of Russian LNG projects under construction, such as Arctic LNG 2 and Murmansk LNG, in the first sanctions targeting Russia’s gas sector.

By Charles Kennedy for Oilprice.com

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  • Mamdouh Salameh on July 10 2024 said:
    Russia's giant LNG producer Novatek and China are made for each other. Therefore, their joint success is assured for the following reasons:

    1- China is the world's largest LNG importer.

    2- It also has 10% investment in Novatek's Arctic project.

    3- Novatek plays a pivotal role in China's energy security by shipping its LNG to China via the Northern Sea Route (NSR) thus reducing both the cost of shipping and and the delivery time.

    4-And despite Western sanctions, Novatek will be able also to supply LNG to China from its Arctic LNG 2 project in the Gydan Peninsula by the end of July or early August.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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