Sanctions Stall Russian Arctic Gas Ambitions, Leaving World’s Largest LNG Plant in Limbo

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The sprawling Belokamenka facility near Murmansk, touted as the world’s largest liquefied natural gas (LNG) plant, has fallen silent as Western sanctions cripple Russia’s energy ambitions. Designed to employ 15,000 workers and serve as a cornerstone of Vladimir Putin’s Arctic expansion strategy, the site now sits deserted, with most contractors abandoning the project.  

 

The Belokamenka yard was built to construct enormous offshore platforms critical for the Arctic LNG 2 project in western Siberia. These platforms were intended to process gas from the Salmanovskoye and Geofizicheskoye fields, facilitating exports to Asia through Arctic sea routes. However, U.S. Treasury sanctions, later mirrored by the European Union, have left the project in disarray.  

 

Initially hailed as a world-leading industrial feat, the Arctic LNG 2 project saw its fortunes shift dramatically after sanctions disrupted operations. Two of three planned platforms had been completed and transported to the Gulf of Ob, but production never commenced. The third platform remains unbuilt, effectively rendering the Belokamenka yard redundant.  

 

Vitaly Yermakov, of the Oxford Institute of Energy Studies, noted that the sanctions against Russia’s LNG projects have been unusually effective. Novatek, Russia’s second-largest gas company and the developer of Arctic LNG 2, has faced logistical hurdles exacerbated by a shortage of ice-breaking LNG carriers. While Novatek relied on the Zvezda Yard in Vladivostok for ship construction, the facility struggled to meet the technical demands, leaving the project with insufficient vessels to transport gas.  

 

Reports from the Barents Observer and the Arctic Observer confirm the site’s shutdown. Major contractors, including Vellestroy and Renkons Arktik, have departed, leaving only 500 personnel, primarily security staff, at the once-bustling site.  

 

Despite the setbacks, Ashley Kelty, an oil and gas analyst at Panmure Gordon, believes the shutdown will have minimal impact on European LNG supplies, which predominantly come from Qatar and the United States. “There was a Russian desire to export LNG to Asia as the gas exports to Europe hinged around pipelines like NordStream2 rather than LNG,” Kelty explained. He added that U.S. capacity is expected to grow significantly by the decade’s end, further reducing any dependency on Russian LNG.  

 

In a further blow to Putin’s Arctic strategy, India, one of Russia’s key energy partners, has declined to purchase LNG from Arctic LNG 2. “We will not buy [supply from] Arctic LNG 2. We are not buying any sanctioned commodity. Something which has broad-based sanctions, we are not touching it,” said Pankaj Jain, India’s oil secretary. Despite this, Russia has continued to supply crude to India, with Rosneft recently securing a deal to deliver nearly 500,000 barrels per day to Reliance, India’s largest private refiner.  

 

Neither Russia’s energy ministry nor Novatek offered comments on the project’s status, while a spokesperson for the Russian Embassy in London declined to respond. The setbacks at Belokamenka underscore the profound impact of sanctions on Russia’s Arctic ambitions, leaving one of Putin’s flagship energy projects in limbo.

 

Based on a report by Daily Telegraph 2024-12-14