MOSCOW: Foreign shareholders suspended participation in the Arctic LNG 2 project due to sanctions, renouncing their responsibilities for financing and for offtake contracts for the new Russian liquefied natural gas (LNG) plant, the daily Kommersant reported on Monday.

The project, seen as a key element in Russia’s drive to boost its LNG global market share to 20 per cent by 2030 from 8pc, was already facing difficulties due to US sanctions over the conflict in Ukraine and a lack of gas carriers.

China’s state oil majors CNOOC Ltd and China National Petroleum Corp (CNPC) each have a 10pc stake in the project, which is controlled by Novatek, Russia’s largest LNG producer and owner of a 60pc stake in the project.

Kommersant, citing unnamed sources in the Russian government, said both Chinese companies, together with France’s TotalEnergies and a consortium of Japan’s Mitsui and Co and JOGMEC — which also have a 10pc stake each — declared force majeure on participation in the project.

Novatek, CNOOC, JOGMEC and Total did not immediately respond to requests for comment. CNPC and Mitsui declined to comment.

Kremlin spokesman Dmitry Peskov declined to comment on the developments at the Arctic LNG 2 project, referring the questions to Novatek.

The newspaper said the suspension may lead to Arctic LNG 2 losing its long-term contracts on LNG supplies, while Novatek will have to finance the project by itself and sell the seaborne gas on the spot market. Initial investments in the Arctic LNG 2 project stood at $21 billion.

It already faced difficulties in raising funds following Western sanctions against Russia.

Sanctions have also resulted in Novatek declaring force majeure over LNG supplies from the project, industry sources told Reuters last week.

Published in Dawn, December 26th, 2023