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From a cramped booth in a crowded conference center on New Delhi’s outskirts, executives from one of Russia’s biggest energy firms made their sales pitch to Indian buyers — take our Arctic gas now, while it’s still cheap.
A flagship project in the far north, Arctic LNG 2 was intended as a symbol of Russia’s enduring gas might, even with only minimal pipeline sales to Europe. Targeted by US sanctions, however, the $21 billion-plus facility led by Novatek PJSC halted production last year. It began to assemble a shadow fleet of liquefied natural gas tankers to keep the super-chilled fuel moving, but those vessels remain idled.
Officials from Novatek told Indian importers at the country’s biggest oil gathering last month that this was about to change.
President Donald Trump would bargain with Russian counterpart Vladimir Putin to end the war in Ukraine — and would ultimately scrap sanctions, the gas officials said, according to people who attended the meeting. The people asked not to be identified as they are not authorized to speak to the media.
Reality is less clear cut. There is no guarantee that Trump will ease curbs on Russia. The US has publicly signaled no sanctions relief would be granted prior to a formal deal on Ukraine, and even then punitive measures tend to be far easier to impose than to remove.
Still, presidential advisers are said to be looking into which measures could be tweaked if there is progress in talks with Moscow — and Novatek is the latest Russian firm to seize the marketing opportunity.
Officials at Novatek and Arctic LNG 2 did not respond to emails seeking comment. The White House also did not respond to a request for comment.
India, which has close historic ties with Russia, has rushed to buy discounted crude under the Group of Seven’s “price cap” mechanism. Moscow’s producers became the country’s top oil suppliers, up from closer to zero before the war. Price, India’s oil minister has said, is the only criteria.
Sanctions on tankers have slowed that flow — and at last month’s conference buyers enticed to purchase stranded Arctic gas were cautious, even after dangled discounts, the people said. They said none of the Indian importers signed up, though some indicated they could be interested if conditions changed.
“You don’t get the sense in Asia that there’s a long-term aversion to Russian gas,” said Lachlan Clancy, a partner at Herbert Smith Freehills who advises on financing for oil, gas and power operations. “It’s more of a sanctions issue.”
Gas Gamble
Novatek’s pitch is a significant gamble for buyers.
In the oil market, there are signs of shippers and middlemen finding workarounds to help blunt even more recent American efforts to blacklist vessels from the dark fleet, the flotilla of old, often uninsured vessels ferrying sanctioned exports around the world.
But while LNG is vital for Russian gas exports, it is also far less flexible than crude, with a limited number of specialized tankers that are challenging to mask movement from the eyes of regulators — and vulnerable to sanctions.
Russia’s fleet of sanctioned LNG vessels, roughly ten ships compared to hundreds for oil and related products, has been stalled for months as buyers hold back. Five LNG shadow fleet ships are anchored in North Russia near the Barents Sea, three are in Russia’s far east, and two are just north of Egypt in the Mediterranean, according to ship-tracking data compiled by Bloomberg.
Read More: How Moscow Assembled a Shadow Fleet to Break US Gas Sanctions
Not a single one of the vessels landed at an overseas port to deliver the fuel. Most of the shipments were offloaded into Russian storage.
“The market has for a while already assumed that this would come as part of an agreement about Ukraine, but I have not registered anything yet that Russia would see LNG sanctions lifting,” said Kjell Eikland, managing director of Eikland Energy AS and an oil and gas veteran who closely tracks the Russian dark fleet.
“I do not believe any prospective buyer will gamble but wait for a formal lifting of sanctions.”
The next opportunity for the Arctic LNG 2 plant to export fuel will come when ice around the facility recedes in the summer months — late May at the earliest, Eikland estimated.
For Novatek and others, Trump himself remains the biggest unknown. He has made ouvertures to Russia — and will speak with Putin on Tuesday — but has also threatened more sanctions. Russian LNG flooding the market, meanwhile, would provide direct competition for US gas exports, a key bargaining chip in Trump’s trade war, and dampen prices.
“There is great enthusiasm for boosting further US exports,” said Geoffrey Pyatt, the former US assistant secretary of state for energy resources who helped craft Arctic LNG 2 sanctions under the Biden administration. “Novatek is direct competition.”
Russia’s oil and gas industry has been dialing up its lobbying efforts anyway. Denis Solovyov, a Novatek senior executive, traveled to Washington in December in order to meet with policymakers, pitching deepening relations with Russia as a way to counter a rising China, according to people with knowledge of the matter.
Solovyov made a similar trip to Brussels in January, the people said. He did not specifically promote Arctic LNG 2, they said, adding the trips were intended to enhance his understanding of the market.
China’s Belt and Road infrastructure investment initiative “threatens US energy security, global supply chains, and access to critical raw materials,” according to a note to US policymakers seen by Bloomberg and sent by a lobbyist representing the Union of Oil and Gas Producers of Russia. “A recalibrated US-Russia relationship could mitigate those risks.”
The post Russia Is Wooing Arctic Gas Buyers With Life After US Sanctions – Bloomberg appeared first on Energy News Beat.
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