Russia’s Arctic LNG 2 project, a major liquefied natural gas (LNG) terminal, has halted gas liquefaction due to mounting restrictions under Western sanctions. The facility, situated close to the Arctic Circle, is struggling to transport and sell its gas products due to barriers imposed by Western nations in response to Russia’s military actions in Ukraine, Bloomberg reported on Monday.
The liquefaction process at the terminal has been suspended as gas inventories accumulate without a feasible export pathway, according to anonymous sources familiar with the matter. Commercial operations have been impeded by a combination of logistical and financial challenges stemming from successive waves of sanctions introduced over the past year.
The Arctic LNG 2 facility, which was designed with an annual production capacity of 19.8 million tonnes, has been a target for sanctions imposed by the United States and its allies, affecting its ability to access icebreaking tankers built in South Korea specifically for this project. The restrictions have not only delayed its ability to reach international markets but also deterred potential foreign buyers, compounding the plant’s operational difficulties.
Following the operational halt, the average daily gas output from the field supplying Arctic LNG 2 has dropped sharply, reaching an estimated 5.3 million cubic metres in October—less than half of the facility’s average daily production in September, which stood at 12.1 million cubic metres. Some level of gas processing has continued in order to maintain operational stability within the plant, even though commercial production remains interrupted. Previously, Arctic LNG 2 had processed small volumes of gas to keep its systems active prior to full-scale loading for transport earlier this year.
EU Sanctions Prompt Russia to Rethink Arctic LNG Export Routes
Although the plant successfully initiated LNG exports in August via conventional tankers, these shipments have faced significant hurdles, with none of the eight cargoes so far finding confirmed buyers. These tankers, often of unclear ownership, have been able to carry gas under limited commercial conditions, yet demand has remained low, likely due to both geopolitical risks and uncertainties surrounding the project’s long-term viability.
This recent suspension highlights the compounded impact of international sanctions on Russian energy projects, especially those requiring complex logistical support and specialised equipment such as ice-class tankers.
Image Credits: Novatek
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Arctic LNG 2 Stranded by Western Sanctions: Russia Struggles to Find Buyers