Russia's Arctic LNG 2 to load first tanker this month, sources say

Credit: REUTERS/DADO RUVIC

By Vladimir Soldatkin and Marwa Rashad

MOSCOW/LONDON, Jan 16 (Reuters) - Russia's Arctic LNG 2 project is set to load its first liquefied natural gas (LNG) tanker for Asia at the end of January, two industry sources said on Tuesday, despite disruptive U.S. sanctions, while initial volumes are expected to be small.

The sanctions, imposed on Arctic LNG 2 over the conflict in Ukraine in November, led to force majeureon LNG supply from the project as well as reportedly forcing foreign shareholders to suspend their participation.

Russia is the fourth-largest producer of sea-borne LNG behind the United States, Qatar and Australia.

The project, located in the Gydan Peninsula in the Arctic, is key to Russia's efforts to boost its share of the global LNG market to a fifth by 2030-2035 from 8% now.

With three processing trains, Arctic LNG 2's capacity is meant to be 19.8 million metric tons per year and 1.6 million tons per year of stable gas condensate. Production is due to start in early 2024.

The first train has already started production while two other trains are yet to be delivered to the project's site from a plant in Murmansk.

Its first LNG tankers had been expected to set sail in the first quarter of 2024, according to majority stakeholder in the project, Novatek NVTK.MM.

One of the sources said the first cargo's delivery is expected at the end of the month, and the destination for it could be either China or South Korea.

It is likely that the cargo would be supplied by an Arc 7 class vessel, which is able to tackle thick ice, to the Russian north-western port of Murmansk with further loading on to a conventional carrier.

Novatek did not reply to a request for comment.

One of the sources said that the first LNG cargo from the project would be loaded onto the Christophe de Margerie Arc 7-class LNG tanker.

Another industry source said that the first LNG volumes from the project are likely to be "very minimal" due to sanctions.

"Only third-tier Chinese companies with very limited exposure (or zero exposure) to the U.S. market will be able to touch this LNG," he said.

China's state oil majors CNOOC Ltd 0883.HK and China National Petroleum Corp (CNPC) each have a 10% stake in the project, which is controlled by Novatek, Russia's largest LNG producer and owner of a 60% stake in the project.

France's TotalEnergies TTEF.PA and a consortium of Japan's Mitsui and Co 8031.T and JOGMEC each hold a 10% stake.

(Reporting by Vladimir Soldatkin in Moscow and Marwa Rashad in London, Editing by Louise Heavens)

((vladimir.soldatkin@thomsonreuters.com; twitter: @vsoldatkin;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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