Russia lacks Arctic tankers for gas delivery

Russia aims to increase its share of the LNG market to 20% by 2030 from the current 8%. However, implementation of these plans is hindered by sanctions.

The Arctic LNG-2 project involves LNG production on the Gydan Peninsula, comprising three lines with a capacity of 6.6 million tons each, totaling 19.8 million tons annually. The project also includes the production of 1.6 million tons of stable gas condensate per year.

According to Novatek, the project was supposed to be completed by the end of 2023, with the first LNG tankers set to sail in the first quarter of 2024. However, industry sources indicate that commercial LNG deliveries from the project are now expected no earlier than the second quarter of 2024.

Russia is exploring the possibility of using the Northern Sea Route for cargo shipments to Asia, a route that could reduce delivery times by 40% compared to the Suez Canal. However, challenges such as thick ice and freezing temperatures pose serious obstacles to shipping through this route.

Ice-class tankers

Ice-class tankers feature reinforced structures capable of withstanding ice pressure. They also have strengthened propellers to enhance maneuverability in challenging ice conditions. Currently, only three ice-class tankers suitable for the Arctic LNG-2 project have been constructed: the Alexey Kosygin, Pyotr Stolypin, and Sergey Witte.

The Russian Zvezda Shipbuilding Complex will build 15 Arc7 ice-class tankers for the Arctic LNG-2 project, capable of breaking ice up to 2 meters thick. Another six Arc7 tankers were supposed to be constructed by the South Korean company Hanwha Ocean, but three of them, ordered by the Russian company Sovcomflot, were canceled due to sanctions against Russia.

Andrey Klepach, the chief economist of the state creditor VEB, stated at a gas forum last week that the necessary infrastructure in Russia is likely to be ready only after 2030.

"I think it's not only about icebreakers but also about ice-class gas carriers - such ships do not exist yet," said Andrey Klepach, the chief economist of the state creditor VEB.

Sovcomflot has announced that the construction timelines for gas carriers for Arctic LNG-2 have been postponed by a year, and the ships will only be available in 2024.

U.S. sanctions against Arktika ZPG-2

The Arctic LNG-2 project came under U.S. sanctions on November 2, 2023.

Earlier, according to Reuters, two Chinese oil companies had requested permission from the United States to participate in the Russian Arctic LNG-2 project, which is under sanctions.

We also reported that gas supplies from the Russian Arctic LNG-2 project were delayed due to U.S. sanctions. The project operator declared force majeure circumstances.