Russia's massive Arctic LNG project halted by sanctions
Due to Western sanctions, the largest liquefied natural gas plant in the Russian Arctic has become inactive. The facilities in Belokamenka near Murmansk, which were expected to employ 15,000 workers, are now deserted, reports "The Telegraph".
Russia's ambitious Arctic project, intended as a showcase of the country's technological prowess, has faltered. As recently as 2023, President Vladimir Putin, alongside Novatek's CEO Leonid Mikhelson, proudly unveiled the Belokamenka facilities as a leading world-class industrial site.
Just a few months afterward, the U.S. Department of the Treasury and the European Union imposed sanctions on the Arctic LNG 2 project, effectively halting it, reports "The Telegraph".
Ambitious plans broken by sanctions
The shipyard in Belokamenka was designed as a key element of a broader plan to export gas from Siberian fields. The plant was expected to produce enormous offshore platforms necessary for liquefying gas as part of the Arctic LNG 2 project. The raw material was then to be transported to consumers in Asian countries via northern sea routes.
Two of the three planned platforms have already been built and transported to the Ob Bay, where the gas fields are located. They were supposed to reach a production capacity of 22 million short tons of gas per year. Currently, however, none of them are operational, and the construction of the third platform will most likely never materialize.
Technological and logistical problems
The project encountered significant technical obstacles. Novatek desperately needed a specialized fleet of icebreakers to transport the liquefied gas. However, due to the risk of sanctions, practically no foreign shipyard was interested in building them. Russian shipyards were also unable to meet the challenge of constructing such advanced units.
The situation is further complicated by India's stance, which was seen as one of Putin's key trading partners. Indian Oil Minister Pankaj Jain unequivocally stated that his country would not purchase gas from Arctic LNG 2, as they do not want to risk consequences related to violating international sanctions.
Russia has a problem
Currently, only 500 workers remain in the once-bustling facilities, mostly security personnel. Experts from the Oxford Institute for Energy Studies emphasize that sanctions against Russian LNG projects have proven exceptionally effective. Both the Russian Ministry of Energy and Novatek have not responded to requests for comment on this matter.
The collapse of the Arctic LNG 2 project will not significantly impact the European gas market, as the main LNG supplies to Europe currently come from the United States and Qatar. However, it is worth noting that despite the failure of the Arctic LNG 2 project, energy trade between Russia and India has not been completely halted. Recently, Russian oil giant Rosneft signed a historic contract with Indian refiner Reliance for the supply of 500,000 barrels of crude oil per day.
