Russia’s Arctic LNG 2 has stopped production as the blacklisted export facility struggles to sell its cargoes, a source close to the project tells Energy Intelligence.
The project shut down its first 6.6 million ton per year train a couple of weeks ago as storage tanks topped out, Energy Intelligence understands. The train might not be able to restart during the winter either.
Gas production feeding into the project dropped to marginal volumes around that time, another source familiar with upstream data said.
Arctic LNG 2 hasn’t loaded cargoes since Oct. 7, according to data from commodity analytics firm Kpler.
The project temporarily suspended LNG production earlier this year after being unable to evacuate product from Train 1 following its launch in December 2023, as US imposed sanctions against the Arctic LNG 2 operating company last year.
While the US avoided placing sanctions on existing Russian LNG export facilities in the wake of Russia’s 2022 invasion of Ukraine, Washington has been keen to severely impair new export volumes — and the additional revenues Moscow would receive from them.
Arctic LNG 2 was able to resume production in August. However, the tankers accepting those cargoes immediately found themselves the targets of fresh US sanctions, as the Biden administration attempts to keep up the pressure.
Since the beginning of August, Arctic LNG 2 loaded eight cargoes. Crucially, though, none of them has reached a final buyer.
Train 1 and Train 2
Before the latest shutdown, Train 1 was operating below 50% of capacity due to technical issues with a Baker Hughes LM9000 gas turbine.
The turbine has now undergone repair work, and when it is installed, the train should be technically able to once again produce at full capacity.
It is not clear whether Arctic LNG 2 will start its second train, scheduled for the end of this year, given the Train 1 shutdown and storage tank capacity constraints.
The 6.6 million ton/yr Train 2 was completed earlier this year and is already at the project’s site on Gydan Peninsula in the Arctic.
Chinese Contractors for Train 3?
Arctic LNG 2 reportedly suspended construction of its third train in August due to sanctions-driven difficulties with the procurement of equipment, pushing its planned launch date from 2026 to 2028.
However, new indications suggest the timeline may not be extended that far.
The source close to the project says that China’s Penglai Jutal Offshore Engineering Heavy Industries, blacklisted by the US in June this year for its involvement in Arctic LNG 2 construction, plans to send hundreds of Chinese contractors to the Novatek Murmansk LNG construction center in northwestern Russia from January 2025 to complete Train 3’s construction.
Regardless of whether the train is completed closer to its original start date, it is still seen as unlikely that Arctic LNG 2 will receive all 21 ice-class tankers ordered for the three-train project — another obstacle beyond buyer reticence standing in the way of a fully operational three-train scheme.
The Arctic LNG 2 operating company handles LNG volumes for the plant, but equity partners include Novatek, with 60%, TotalEnergies (10%), China National Petroleum Corp. (10%), China National Offshore Oil Corp. (10%) and a consortium of Japan's Mitsui and Jogmec (10%). (October 25, 2024, Source: https://www.energyintel.com/00000192-c449-d095-afde-c4ef15550000)
RUSSIA - LNG - PRODUCTION - SUPPLY IMPORT EXPORT