Russia has activated a second production line at its Arctic LNG 2 facility, a flagship project in the country’s push to expand liquefied natural gas (LNG) exports, despite severe Western sanctions and the absence of international demand.
According to a report by Bloomberg, the project — spearheaded by Russia’s largest independent gas producer, Novatek — has begun producing fuel on “Train 2”, the second of three planned liquefaction lines. The move comes after months of inactivity following production halts in October 2024 due to sanctions-related supply disruptions and ice accumulation that impeded shipping routes.
While the regional authorities have approved the launch of the second production unit, there is still no confirmation of full-scale LNG production or commercial deliveries. The plant, located on the Gydan Peninsula in Russia’s far north, remains largely isolated from international markets as Western buyers have pulled back in response to sanctions imposed after Russia’s 2022 full-scale invasion of Ukraine.
The United States has led international efforts to restrict Russia’s access to energy revenues, specifically targeting the Arctic LNG 2 project in late 2023. These measures included export bans on technology and equipment essential for LNG production and storage, as well as restrictions on maritime services and financing. The EU followed with similar measures, further isolating the project from the global energy trade.
In practice, these restrictions have significantly delayed the Arctic LNG 2 project’s original timetable. The first production line (“Train 1”) was completed in late 2023 but was unable to enter full operational mode due to a lack of specialised equipment and trained personnel. Although some gas was exported during the summer of 2024, Bloomberg reports that none of the cargoes found buyers on the international market.
Despite the operational difficulties and the lack of external demand, the Kremlin has continued to support the project politically and logistically. Arctic LNG 2 is seen as a critical component of President Vladimir Putin’s ambition to establish Russia as a dominant player in the global LNG market, challenging established producers such as Qatar, Australia, and the United States.
The annual production capacity of Train 2 is reported to be 6.6 million tonnes. Combined with the other units, the total output capacity of Arctic LNG 2 is designed to exceed 19 million tonnes per year. However, with the first train operating below capacity and the second only recently commissioned, the commercial viability of the entire project remains uncertain.
The situation on the ground also reflects operational and environmental challenges. Last month, observers recorded flaring — the combustion of excess gas — at the site. This is typically interpreted as a sign of processing activity, but in this case it may also indicate difficulties in gas storage or transportation.
Novatek, the project’s majority shareholder, has not issued a public statement confirming the volume or destination of any potential LNG shipments from Train 2. The company has reportedly attempted to redirect supplies towards non-Western markets, including China and India, but logistical hurdles and pricing competitiveness continue to impede these efforts.
Meanwhile, the broader Russian LNG sector remains under pressure. Other planned projects have stalled due to similar technology restrictions and the departure of foreign partners. The Arctic LNG 2 project had originally involved investment from French, Japanese, and Chinese firms, but most Western stakeholders have withdrawn since 2022. Chinese participation has so far remained limited to a strategic rather than operational role.
With limited export infrastructure and few willing buyers, Russia faces growing uncertainty over its ability to monetise Arctic LNG assets. The country’s conventional pipeline exports to Europe have fallen sharply since the war in Ukraine began, and the Kremlin had hoped LNG would serve as an alternative revenue source.
However, industry analysts note that the outlook remains poor in the absence of access to advanced liquefaction technologies and stable international partnerships. While domestic efforts continue to keep the project alive, the global LNG market shows little appetite for new Russian supplies, especially amid ongoing geopolitical tensions and competition from established producers.
In the meantime, the symbolic importance of the Arctic LNG 2 project appears to outweigh its economic logic. The Kremlin’s persistence reflects a broader strategy of demonstrating resilience in the face of sanctions, even when the underlying commercial case remains weak. As it stands, the facility continues to operate in a vacuum — producing fuel for an export market that is either inaccessible or unwilling to engage.
Read also:
Russia’s Arctic LNG 2 Project Stalls as Sanctions Disrupt Exports
