(Bloomberg) -- Russia’s plans for higher gas exports will draw from a liquefied natural gas project in the Arctic that’s the target of US sanctions.
Moscow aims to export 35.2 million tons of the super-chilled fuel this year, according to the base scenario of the new macroeconomic outlook through 2030, seen by Bloomberg. The document by the Economy Ministry will be used for planning longer-term national projects, a source close to the government said.
That’s 1.9 million tons above last year’s shipments and equivalent to around 30 cargoes. With two major Russian LNG facilities already operating above their design capacity, at least a half of those volumes would have to come from the Novatek PJSC-led Arctic LNG 2, the main focus of US energy sanctions against the Kremlin this year, according to Bloomberg calculations.
Washington and its allies are working to reduce the Kremlin’s future revenues from energy exports amid the war in Ukraine. To achieve the goal, the US has sanctioned not only Arctic LNG 2, which came online in late 2023, but also the tankers connected to it, severely restricting the pool of vessels at the plant’s disposal.
Russia has responded by amassing a small shadow LNG fleet to bring the new Arctic cargoes to the global market. However, all the vessels that serve the facility so far are non-ice class. Which means they may not be able to take shipments from above the Polar circle once the summer navigation season ends.
Last year, the eastbound navigation through Russia’s Northern Sea Route towards Asia ended in the first half of November. Westbound navigation towards Europe is possible all year thanks to lighter ice conditions, but the vessels may not be equipped to make the whole journey.
Two major Russian facilities — the Sakhalin LNG and the Yamal LNG — are operating above their design capacities and are capable of exporting over 31 million tons per year. Two smaller plants on the Baltic shore, Vysotsk and Portovaya, can produce and ship around 2.16 million tons a year.
That means the bulk of the planned ramp up will most likely come from Arctic LNG 2, which did not make any exports in 2023.
Russia’s economy and energy ministries as well as Novatek didn’t immediately respond to requests from Bloomberg seeking comments.
Russia has laid out targets for further annual hikes in LNG exports, to 40 million tons in 2025 and 45.2 million tons in 2026, according to the outlook document. These volumes could materialize if Novatek launches the second train at Arctic LNG 2, gradually bringing the facility’s production to the design capacity of those trains of as much as 13.2 million tons a year.
In 2030, Russia aims to export 103.2 million tons of super-chilled fuel, a goal that would require a significant expansion of its LNG production industry.
©2024 Bloomberg L.P.
