Russia's Arctic LNG dream crumbles under Western sanctions
As a result of Western sanctions, the world's largest liquefied natural gas factory in the Russian Arctic has become useless. The facilities in Belokamenka near Murmansk, which were supposed to employ 15,000 workers, are currently empty, reports "Telegraph".
Russia's ambitious Arctic project, which was meant to be a showcase of the country's technological prowess, has fallen apart. As recently as 2023, President Vladimir Putin, along with the head of Novatek, Leonid Michelson, proudly presented the Belokamenka facilities as a leading global industrial entity.
Just a few months later, the U.S. Department of the Treasury and the European Union imposed sanctions on the Arctic LNG 2 project, which led to its effective freeze, reports "The Telegraph".
Ambitious plans hit a wall of sanctions
The shipyard in Belokamenka was designed as a key element of a broader plan to export gas from Siberian deposits. The facility was intended to produce massive offshore platforms necessary for liquefying gas as part of the Arctic LNG 2 project. The raw material was to be shipped to consumers in Asian countries via northern sea routes.
Two of the three planned platforms have already been built and transported to the Ob Bay, where the gas deposits are located. They were expected to reach a production capacity of 20 million metric tons of gas per year. However, none of them currently operate, and the construction of the third platform is likely never to be completed.
Technological and logistical problems
The project's implementation encountered significant technical obstacles. Novatek desperately needed a specialized fleet of icebreakers to transport the liquefied gas. However, due to the risk of sanctions, virtually no foreign shipyard was interested in building them. Russian shipyards also failed to meet the challenge of constructing such advanced units.
The situation is further complicated by India's stance, which was seen as one of Putin's key trading partners. Indian oil minister Pankaj Jain clearly stated that his country would not purchase gas from Arctic LNG 2, not wanting to risk consequences related to violating international sanctions.
Russia has a problem
Currently, only 500 employees, mainly security personnel, remain in what were once bustling facilities. Experts from the Oxford Institute for Energy Studies emphasize that sanctions against Russian LNG projects have proven exceptionally effective. Both the Russian Ministry of Energy and Novatek have not responded to requests for comment on the matter.
The collapse of the Arctic LNG 2 project will not significantly impact the European gas market, as the main LNG supplies to Europe currently come from the United States and Qatar. It's worth noting, however, that despite the failure of the Arctic LNG 2 project, energy trade between Russia and India hasn't been completely halted. Recently, Russian company Rosneft signed the largest oil supply contract in history with Indian refinery Reliance, amounting to 80,000,000 litres per day.
