None of the liquefied natural gas (LNG) produced by NOVATEK's Arctic LNG 2 plant has officially been delivered to foreign consumers, as revealed on December 5 by the President of the National LNG Association. It was suggested that the unclaimed energy resources could be redirected to the domestic market.
The future of the Arctic LNG 2 plant, a NOVATEK project located in the Yamal region and subject to Western sanctions, remains uncertain. During a webinar "The Future of the Russian and Global LNG Market" it was argued that the gas has yet to reach its intended consumers. The event was organized by the National Association of LNG.
According to our data, 600,000 tons of LNG from Arctic LNG 2 are stuck at sea, either on terminals or in tankers, equating to approximately $150 million
stated Alexander Klimentyev, Vice President of the National Association of LNG Scientific and Expert Council and a member of the Russian Gas Society’s Expert Council
He added that four LNG carriers are currently stranded with NOVATEK’s unsold products—three near Nakhodka, Primorsky Territory, and one in Singapore. Additional LNG has been transferred to floating storage facilities, such as Koryak and Saam FSUs. These facilities, equipped with boil-off gas reliquefaction systems, allow the LNG to be stored for extended periods, albeit with energy costs.
NOVATEK has made no public comments regarding the situation. Unconfirmed reports suggest that some LNG has been transshipped in open waters and sold on the spot market during periods of heightened demand.
The central question now revolves around what to do with new Russian LNG projects, such as the promising Murmansk LNG project by NOVATEK and the Ust-Luga complex by Russian energy company RusChemAlliance Ltd (RCA), both of which are also under sanctions. Even reported price discounts of up to 40 per cent have failed to attract buyers for Arctic LNG 2. Alexander Klimentyev says that further price reductions might eventually outweigh buyers' fear of sanctions, but there are no guarantees.
Klimentyev advocates for deeper integration and exploration of new markets. “We need to move beyond merely producing LNG and operating LNG carriers to developing export infrastructure in partnership with Russia's strategic allies, many of which are also under sanctions,” he said. Potential partners include Venezuela, Cuba, and North Korea.
Creating this infrastructure, however, requires substantial investment. It is estimated that $6 billion would be needed to establish reception facilities for Arctic LNG 2 and the future RCA project in new markets. Whether such investments are justified will depend on detailed analysis, but this path could ensure sustainable development and sales.
Using Arctic LNG 2’s stranded gas domestically is an option, but the domestic market might struggle to absorb such volumes.
Currently, the maximum production capacity of Russia's small-scale LNG plants is 338,000 tons, with consumption only 60-63 per cent of that. The Arctic LNG 2 cargo is nearly double the total capacity of all small-scale plants in the country, making it difficult to utilize such volumes immediately,
the President of the National LNG Association explained.
Klimentyev suggested that part of the LNG near Nakhodka could be used for cooling vessels under construction at the Zvezda Shipbuilding Complex.
A faster solution, the President of the National LNG Association proposed, would be to create floating terminals along Russia’s coastline to use the gas for regional energy needs. However, the floating storage units currently holding Arctic LNG 2’s cargo were designed for large-scale transfers, complicating their use for domestic supply.
“For example, it would seem logical to supply gas for Kamchatka's gasification from the Koryak FSU, located just 100 kilometers from Petropavlovsk-Kamchatsky. Yet technical limitations force the region to rely on gas shipped from Sakhalin,” Klimentyev concluded.
Future infrastructure projects should incorporate flexibility to facilitate the use of LNG in the domestic market.
Source: Mash News
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