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Russia's Novatek Opens China Office to Sell Natural Gas Amid Tighter Sanctions

Amid U.S. sanctions stalling progress on natural gas exports from a new Arctic LNG plant, Russian gas producer Novatek is opening an office in China and creating a team based there to sell gas, Reuters reported on Tuesday, citing sources with knowledge of the plans.  

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.

Novatek’s new Arctic LNG 2 project has been basically on ice since the U.S. imposed in November fresh sanctions on Russian project.

The Arctic LNG 2 project is being developed by Russia’s largest independent natural gas producer, Novatek, and was on track to begin first production in late 2023.  

Novatek holds a 60% stake in Arctic LNG 2. The other shareholders include CNOOC of China and China National Petroleum Corporation (CNPC), French supermajor TotalEnergies, and Japanese firms Mitsui Group and Jogmec.   

In September, the U.S. levied some sanctions on the Arctic LNG 2 project, designating Russian services companies connected with its development.

Two months later, the U.S. Department of State designated limited liability company ARCTIC LNG 2, the operator of the Arctic LNG 2 Project, as part of additional sanctions against Russia “to further target individuals and entities associated with Russia’s war effort and other malign activities.” 

At the end of December, reports emerged that Chinese state energy giants plan to ask the United States for exemptions from the sanctions on the Arctic LNG 2 project in a rare request to the U.S. as LNG deliveries could be threatened.

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CNOOC and CNPC are preparing to apply for sanctions exemptions to buy cargoes from Arctic LNG 2, to make sure that they don’t run afoul of the U.S., from which the Chinese firms also buy LNG, Bloomberg reported at the time, citing sources familiar with the issue.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on February 06 2024 said:
    Russia's largest LNG producer and exporter Novatek is a rising star in the LNG world. It is the most innovative LNG company with the assured proven reserves and home-grown technology to achieve its declared ambition to overtake current major LNG producers and become the world's number one producer and exporter by 2038.

    US sanctions against its giant LNG 2 project are a child's play when compared with nature's challenges in the Russian Arctic which Novatek has managed to overcome.

    Moreover, it has the assured market to sell its LNG in China whose which two of its major companies: CNOOC of China and China National Petroleum Corporation (CNPC) are shareholders and an office and a marketing team in the country to market its LNG.

    It will soon find ways to evade US sanctions exactly as Russia did very successfully.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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