Russia Reduces LNG Forecasts As Western Sanctions Delay Arctic Projects

In a sign of the effectiveness of Western sanctions targeting Russian liquefied natural gas (LNG), the country’s Ministry of the Economy has published revised estimates for future LNG production. 

According to the Ministry under the conservative and stress scenarios production would remain largely stable between 36.6 and 38.6 million tonnes during 2025-2027, up from 32.9 million tonnes in 2023. Under a more optimistic base forecast production could reach 56.6 million tonnes by 2027. 

The figures represent a sharp downward revision to previous estimates. In 2021 the Ministry expected Russia to produce 49.4 million tonnes of LNG in 2024 under the conservative scenario.

Ministry of the Economy LNG scenarios for 2024-2027 in million tonnes per year. (Source: Ministry of the Economy)

Can Russia reach 2030 LNG goal

Russia’s previously stated goal is to produce 100 million tonnes of LNG annually by 2030. The Ministry’s report does not state how these new forecasts affect Russia’s long-term goal to capture 20 percent of the global LNG market by the end of the decade, up from 8 percent currently. 

Russia’s ability to reach the 2027 estimate let alone its 2030 goal will largely depend on the successful implementation of the Arctic LNG 2 project and the upcoming Murmansk LNG facility.

The Ministry’s figures suggest that Russia does not expect Train 1 and 2 of Novatek’s Arctic LNG 2 plant to reach full capacity before 2025 and 2026 respectively, even under the best-case scenario. Under the conservative and stress scenarios Train 2 does not appear to enter into production even by 2027. 

In fact, the estimates for 2024-2026 in all three scenarios indicate that Russian officials anticipate Arctic LNG 2 to produce less than its nameplate capacity. Originally the first two production lines were scheduled to enter into service in 2023 and 2025, each adding around 6.6 million tonnes annually.

Not affecting existing plants

The second train is currently nearing completion at the Belokamenka construction yard before it will be towed to the Gydan peninsula this summer. 

Thus far Western sanctions have not targeted or affected production at existing LNG plants. Monthly production data continues to show stable output, with 2024 tracking slightly ahead of previous years. 

However, with possible EU restrictions on Russian LNG on the horizon, even existing facilities like Yamal LNG could face headwinds in the coming years.

Monthly Russian LNG production in million tonnes January 2020 to March 2024. (Source: Rosstat)