Russia's largest liquefied natural gas producer, Novatek, is engaging with lobbyists to restore U.S. relations after Washington sanctioned its massive Arctic LNG 2 project, according to two Reuters’ sources familiar with the situation.

With the U.S. President-elect Donald Trump set to return to the White House on January 20, some in Russia express cautious optimism, though others believe his presidency will bring little change. During his campaign, Trump pledged to end the nearly three-year-old conflict in Ukraine within 24 hours of taking office. Anticipating a potential end to the conflict, Novatek is working to rebuild relations with the West, one source revealed.

Senior executive and board member Denis Solovyov recently traveled from Moscow to Washington to collaborate with a U.S. lobbying firm, the sources said. In the coming weeks, Novatek and its lobbyists plan to reach out to U.S. government entities.

Assistant Secretary of State for Energy Resources Geoffrey Pyatt confirmed that the State Department was aware of Novatek's activities in Washington. However, he suggested that progress with the Biden administration would be unlikely in its remaining weeks.

 "Now is not the time for business as usual with Russia," Pyatt stated. "Russia is in the penalty box, and it’s my job to ensure it stays there as long as possible..."

Solovyov declined to comment, and Novatk did not respond to requests for a statement. The company reportedly aims to remove its flagship Arctic LNG 2 from the sanctions list. These sanctions have forced the project to declare force majeure on supplies and halt production.

The sources, speaking on condition of anonymity due to the sensitivity of the matter, said that Novatek plans to argue that its tax status exempts it from contributing to the Russian effort in Ukraine. Unlike other Russian gas companies, such as Gazprom, which significantly fund the national budget through corporate taxes, Novatek-owned Yamal LNG benefits from substantial tax relief.

Yamal LNG, which is not under sanctions, enjoys zero export duties on LNG and gas condensate and a zero mineral extraction tax rate for these resources. A presentation to investors highlights a 12-year tax exemption for the project starting from profitability, meaning no payments to the Kremlin are required until 2030.

Source: Reuters

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