Russia’s Novatek Eyes India as Market for Sanctioned Arctic LNG
Novatek’s Belokamenka construction yard where modules for Arctic LNG 2 are assembled. (Source: Courtesy of Novatek)
Russian liquefied natural gas producer Novatek continues to scour the globe for potential buyers of sanctioned gas from its Arctic LNG 2 project. At an energy conference the company now attempted to make inroads on the Indian market.
Russia’s largest producer of liquefied natural gas (LNG) continues to probe international markets to find buyers for gas from its sanctioned Arctic LNG 2 project.
With the European market out of the picture and no success with Chinese buyers despite Novatek’s lobbying efforts throughout 2024, the company’s attention has now turned to India as a potential destination. The development was first reported by Bloomberg.
The country’s largest LNG project, Arctic LNG 2, came online in the summer of 2024 but attempts to make deliveries have thus far proven unsuccessful due to U.S. sanctions.
Eight cargoes were lifted from the facility on the Gydan peninsula in the Russian Arctic between August and October 2024 with all remaining aboard LNG carriers or floating holding tanks.
India’s official position on importing sanctioned Russian LNG from the Arctic remains unclear. After initial statements in September 2024 that the country would not buy sanctioned product from Russia, more recent remarks suggest the position may be softening.
Highlighting the importance of the growing Indian market.
Novatek at India energy conference
Senior Novatek officials pitched the idea during a number of meetings at the India Energy Week last week, an industry conference, reports say.
Novatek’s CEO and chairman, Leonid Mikhelson, was also in attendance of the conference, highlighting the importance of the growing Indian market.
The country is already the second-largest buyer of Russian crude oil and oil products, but has thus far only been a minor player for LNG imports from the country.
Lobbying attempts
This development comes on the heels of ongoing Novatek lobbying attempts in Washington DC and Brussels. While little has been reported on who Novatek’s second-in-command, Denis Solovyov, met with in the two capitals, efforts in Brussels may not have been in vain.
The EU remains unable to find a unified voice to phase out Russian LNG. The highest gas prices in more than two years across the continent even put the EU’s 2027 goal of phasing out all Russian gas, both pipeline and LNG, at risk.
Leonid Viktorovich Mikhelson is a Russian-Israeli billionaire businessman, CEO, chairman and major shareholder of the Russian gas company Novatek. (By Council.gov.ru, CC BY 4.0)
The publication of a planned roadmap has been pushed back to at least spring 2025.
Hurdles
Each of Novatek’s two Arctic LNG projects faces their own separate challenges. Its original and thus far unsanctioned facility Yamal LNG is nonetheless confronted with increasing hurdles.
A number of vessels carrying the supercooled gas to markets have been sanctioned, including one of the high ice-class Arc7 carriers.
Even unsanctioned vessels are having a difficult time to secure spare parts, though European shipyards continue to welcome the vessels into their dry docks.
Affecting production
Yamal LNG will also lose the ability to transfer its gas in European ports at the end of March, affecting around 20 percent of its production.
The challenges for Arctic LNG 2 are of a different magnitude altogether. The plant remains unfinished with construction on the third train mothballed.
Train 1 and 2 have been completed but without ice-capable LNG carriers and absent any buyers, Novatek’s flagship plant faces an uncertain road ahead. Offloading some cargoes to India could provide a lifeline for the project.
