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Despite Western Sanctions:
Russia Ramps Up Arctic LNG Exports to Asia as Northern Sea Route Summer Season Gains Momentum
Two LNG cargoes from Russia’s Yamal LNG and Arctic LNG 2 projects are heading east along the Northern Sea Route, signaling a busy summer navigation season and suggesting Novatek is pressing ahead with exports despite Western sanctions and lingering technical problems at Arctic LNG 2.
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Russia has launched its summer Arctic liquefied natural gas export season with cargoes from both its flagship Yamal LNG project and the sanctioned Arctic LNG 2 plant heading east toward Asia, underscoring Moscow’s determination to maintain exports along the Northern Sea Route despite mounting Western sanctions.
The developments mark the first simultaneous eastbound shipments this summer from Russia’s two Arctic LNG projects, pointing to another active navigation season along the ice-covered route linking the Russian Arctic with Asian markets.
The Arc7 ice-class LNG carrier Christophe de Margerie loaded a cargo at Arctic LNG 2 on June 26 before turning east along the Northern Sea Route behind the nuclear-powered icebreaker Arktika, according to automatic identification system (AIS) vessel tracking data.
Struggled
The cargo is particularly significant because the vessel appears to have loaded from Train 2 of Arctic LNG 2, based on Automatic Identification Systems (AIS) positioning data. The production unit has struggled with operational problems since it produced its first LNG cargo just over a year ago.
Train 2 has supplied only two cargoes in total, highlighting the technical difficulties facing Novatek, the project’s majority owner, after redesigning the train to use an electric drive system following the withdrawal of Western technology suppliers.
First two modules for the production line are currently en route from China.
Only one of the train’s two liquefaction strings has been operating because just half of the onshore power plant required to supply electricity has been delivered to the site. Two power plant modules remain in China, limiting the train’s operating capacity.
Another attempt
The latest loading could signal that Novatek intends to make another attempt to bring Train 2 into more regular operation during this year’s Arctic shipping season, potentially expanding the project’s export capacity after last year’s limited production.
The company may also restart work on constructing Train 3 as the first two modules for the production line are currently en route from China.
Additional output would coincide with expanding import infrastructure in China capable of handling cargoes from Arctic LNG 2.
PipeChina’s Shandong LNG terminal is reportedly being prepared to receive shipments from the project, potentially becoming the second Chinese receiving facility to handle its cargoes after the Beihai terminal in southern China.
Beihai has received around 40 cargoes from Arctic LNG 2 over the past year despite U.S. and European sanctions targeting the project and its shipping network.
Yamal LNG also sending cargo
A second LNG carrier, Eduard Toll, loaded a cargo at the Yamal LNG export terminal in Sabetta on June 25 and is also heading east along the Northern Sea Route behind the nuclear icebreaker Sibir.
The late-June departiure continues a pattern established in recent years as Novatek increases deliveries to Asian customers via the Arctic shipping corridor as seasonal ice conditions improve.
The Yamal LNG cargo is expected to sail directly to buyers in Asia, most likely in China.
By contrast, the Arctic LNG 2 cargo is expected to be transshipped via the Koryak floating storage unit off Russia’s Kamchatka Peninsula before onward delivery, reflecting the additional logistical measures required for cargoes from the sanctioned project.
Business as usual
The two voyages suggest that, for now, Novatek’s Arctic export logistics remain largely unaffected by tightening Western sanctions, allowing the company to continue utilizing its fleet of Arc7 icebreaking LNG carriers during the early stages of the summer navigation season.
As in previous years, the specialized Arc7 vessels are expected to carry cargoes through the still ice-covered eastern section of the Northern Sea Route during June.
Once sea ice retreats further in July, lower ice-class vessels and conventional LNG carriers are expected to begin operating along the route, allowing Russia to expand shipments to Asian markets during the seasonal navigation window.
