Vessels exhibiting signs of questionable behavior are exhausting their fuel supplies at the Arctic LNG 2 Russian terminal.
Russia's Arctic LNG 2 terminal, designed to export up to 20 million tons of liquefied natural gas (LNG) annually, has faced significant hurdles in recent months. The Siberian LNG plant produced eight cargoes last summer but had to shut down in October due to a lack of buyers and seasonal ice formation around the plant.
In an attempt to circumvent sanctions and continue exporting LNG, Russia has employed complex shipping arrangements. Some ships from the Russian "shadow fleet" have changed management companies multiple times to obscure their actual owners. These vessels, including the "Iris" and "Voskhod", have been spotted on their way to Asia to find buyers.
Energy expert Jan-Eric Fahnrich sees the biggest obstacle for the Russian LNG plant as finding "buyers and sufficient transport capacities". To attract potential buyers in Asia, Novatek, as the majority shareholder not yet subject to sanctions, will try to offer price discounts. China and India are particularly in Novatek's sights as potential buyers.
However, it remains unclear whether the four ships now headed towards Asia will ultimately find buyers. The coming weeks and months will reveal whether Russia can establish reliable trade routes and whether the West is prepared to counter with further measures. Two more loaded ships are also on their way to North Asia from Arctic LNG 2.
The terminal resumed loading in June this year but no cargoes have yet reached an import facility. Some ships from the Russian "shadow fleet", able to navigate icy waters, have departed on August 15 via the Northern Sea Route to North Asia after being idle for weeks.
For Western states, it would be a setback as their strategy to isolate Russia economically and limit its energy revenues would lose effectiveness. If Russia finds new buyers for its gas, it could decrease global LNG prices, easing pressure on consumers and businesses.
The situation is a delicate one, with Russia relying on sanctioned shipping assets and networks to keep Arctic LNG 2 exports flowing, while affected countries respond by tightening legal frameworks and enforcement mechanisms to disrupt these sanction evasion schemes. The UK has also enacted new regulations to strengthen enforcement against trade, aircraft, and shipping sanctions, targeting entities connected to Russian LNG exports.
Russian President Vladimir Putin aims to triple Russia's LNG exports by 2030. However, the success of this ambitious plan remains uncertain amidst the ongoing sanctions and the need to secure reliable buyers and transport capacities. The coming months will be crucial in determining Russia's future in the global LNG market.
[1] Source: Export Enforcement Five, UK regulations on trade, aircraft, and shipping sanctions.
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