The $25 billion Arctic LNG-2 Russian project has been suspended after it failed to secure buyers of its sanctioned natural gas production, despite offering 40% off.
Bloomberg, citing sources with knowledge of the matter, reports that Russia’s Arctic LNG-2 has halted its operations due to sanctions related sales difficulties.
The $25 billion liquefied gas venture, launched in 2023 by President Vladimir Putin, has not been able to sell any LNG since August, despite offering discounts up to 40%.
“All vessels ordered of this type were restricted, leaving the project with no transport solution. Attempts to resolve the problem failed,” explains Mikhail Krutihin, an oil and gas sector expert, in an interview conducted by Voice of America‘s Russian Service.
The shutdown of Arctic LNG-2 is a major strategic setback for Russia, and could limit its ability to fund the war against Ukraine by increasing gas exports. The failure of the project, triggered by sanctions imposed as a response to Russia’s invasion into Ukraine, shows how effective targeted Western restrictions are on Russia’s energy industry, which has been an important source of revenue for military operations.
Bloomberg’s sources claim that the project’s October production was down by more than half compared to the previous months, and commercial gas liquefaction has been completely stopped. According to the sources, only essential maintenance operations are continuing.
Arctic LNG-2 was designed to help Russia increase their global LNG market share, from 8% pre-war to 20% by 2030. It is expected to have a capacity of 19,8 million tons per annum across three production lines.
All project stakeholders have been affected, including TotalEnergies of France and several Chinese and Japanese firms.
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