"Drill Baby Drill" Bodes Ill for Russian Arctic Gas

A change of regime in Washington may change the degree of sanctions pressure on Russian Arctic gas projects, though the ultimate decider remains the economics.  

With the White House encouraging  production and exports of domestic LNG, the incentives to make it easier for the Moscow regime to sell their gas may not be that pronounced.

Russia's Arctic LNG 2 project, spearheaded by Novatek, seeks to export nearly 20 million tons of liquefied natural gas annually to Europe and Asia. Strategically located on the Gydan Peninsula, it aims to leverage the Northern Sea Route to cut transit times.

However, Western sanctions, particularly under the Biden administration, have constrained Russia’s ability to capitalize on its Arctic resources by limiting access to technology and financing.

Less Pushback Expected

Analysts speculate Trump may adopt a less confrontational stance toward Russia, facilitating its LNG ambitions while prioritizing U.S. energy interests. However, increased U.S. LNG production might lead to oversupply, pressuring prices and complicating Russia’s efforts to maintain profitability.

A shift in U.S. sanctions could encourage greater Chinese involvement, helping Russia navigate Western restrictions. Nonetheless, Arctic LNG 2’s success will depend on global LNG demand, environmental policies, and competitive pressures from U.S. suppliers.

PRC Delivery Flouts US Sanctions

This week a Chinese firm has completed its delivery of the 650MW power plant for the Arctic LNG2 project, built by Chinese engineering fiirm Wison New Energies.

“It’s a fact that hardliner Assistant Secretary Pyatt has seemingly exempted Wison New Energies from his stated goal to “kill Arctic LNG 2” and any sanctions actions. That is concerning,” one analyst told gCaptain.  

Wison is not included in the Arctic LNG 2 sanctions package announced last month [12996].

Noting the Chinese yard's collaboration with western oil services firms Baker Hughes, Chart and ENI, the shipping news services quotes an LNG market analyst: “Wison’s increasing interconnectedness with Western markets appears to have shielded it from facing any consequences for its apparent sanctions violation.”