ua en ru

Foreign shareholders freeze participation in Russia's largest gas project

Foreign shareholders freeze participation in Russia's largest gas project Russia will lose long-term gas supply contracts (Getty Images)
Author: Liliana Oleniak

Foreign shareholders have suspended their participation in the Arctic LNG-2 project due to sanctions, withdrawing from their financing commitments and supply contracts for Russia's new liquefied natural gas (LNG) plant, according to Russian Kommersant.

The project, which is seen as a key element in Russia's quest to increase its share of the global LNG market from 8% to 20% by 2030, has already faced difficulties due to US sanctions following the invasion of Ukraine and a shortage of gas carriers.

China's largest state-owned oil companies CNOOC Ltd and China National Petroleum Corp each own 10% of the shares in the project, which is controlled by Novatek, Russia's largest LNG producer and owner of 60% of the shares in the project.

Kommersant, citing anonymous sources in the Russian government, reported that the two Chinese companies, along with France's TotalEnergies and a consortium of Japan's Mitsui and Co and JOGMEC, which also hold 10% each, have declared force majeure on their participation in the project.

The publication notes that the suspension may lead to Arctic LNG-2 losing long-term LNG supply contracts, and Novatek will have to finance the project on its own and sell offshore gas on the spot market.

The initial investment in the Arctic LNG-2 project amounted to $21 billion. It has already faced difficulties in raising funds after Western sanctions against Russia.

US sanctions against Arctic LNG-2

As a reminder, on November 2, the Arctic LNG-2 project was included in the list of US sanctions on Russia's energy production and export capabilities.

Assistant Secretary of State for Energy Jeffrey Payette stated that Washington aims to "strangle" this project of the Russian Federation.