Sanctions stall Russia's Arctic energy ambitions
Owing to Western sanctions, the largest liquefied natural gas plant in the Russian Arctic has become redundant. The facilities in Belokamenka, near Murmansk, which were meant to employ 15,000 workers, now stand empty, reports "The Telegraph".
Russia's ambitious Arctic project, intended to showcase the country's technological prowess, has unravelled. As recently as 2023, President Vladimir Putin, alongside Novatek's CEO Leonid Mikhelson, proudly unveiled the Belokamenka facilities as a world-class industrial site.
Just a few months later, the US Department of the Treasury and the European Union imposed sanctions on the Arctic LNG 2 project, effectively freezing it, reports "The Telegraph".
Ambitious plans broken by sanctions
The shipyard in Belokamenka was envisaged 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 gas liquefaction as part of the Arctic LNG 2 project. The raw material was to be transported to consumers in Asian countries via northern sea routes.
Two of the three planned platforms have already been constructed and delivered to the Ob Bay, where the gas fields are located. They were intended to achieve a production capacity of approximately 20 million metric tonnes of gas per year. Currently, however, none of them are operational, and the construction of the third platform will most likely never materialise.
Technological and logistical problems
The project encountered significant technical challenges. Novatek desperately needed a specialised 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 repercussions related to violating international sanctions.
Russia has a problem
Currently, only 500 workers remain at the once-bustling facilities, mostly security personnel. Experts from the Oxford Institute for Energy Studies emphasise 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 issue.
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. It is worth noting, however, 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 the largest contract in history with Indian refiner Reliance for the supply of about 80,000,000 litres of crude oil per day.
