Russia has long sought to increase its share of theglobal LNG market, but the war and the subsequent sharp drop in overlandexports to Europe have reinforced the importance of these ambitions.
By Stephen Stapczynski, Bloomberg NewsA photograph shows the Utrenneye field, the resource base for Novatek's Arctic LNG 2 project, located in the Gydan Peninsula on the Kara Sea shore line in the Arctic circle, some 2500 km from Moscow on Nov. 30, 2021.
Thanks to older operations, Russia is currently the fourth-largest LNG exporter globally, but restrictions on the flagship Arctic LNG 2 are crimping its aspirations to go further. More worrying for Moscow, they’ve provided a blueprint for any future Western efforts to rein in the Kremlin’s gas income by targeting operations like Yamal or Sakhalin II in the Far East — still delivering to customers in Europe and Asia.
Now the European Union, which still leans on Russian LNG and has been reluctant to restrict imports, is preparing to roll out some measures of its own. Europe isn’t outright prohibiting the fuel, but the bloc’s discussions signal that gas is no longer off limits as the war enters a third year. There are good reasons for White House officials to target the facility, co-owned by the Japanese government, Chinese state-owned oil companies and France’s TotalEnergies. While it certainly irks important allies, freezing Arctic LNG 2 has the benefit of hurting Moscow while causing only limited ripples in global natural gas markets. No less important for the Biden administration as an election nears, the fallout for US consumers is contained.
“The longer term outlook is clouded by the fact that the primary mission, which was to develop LNG for East Asia across the Northern Sea Route, is at this moment not possible.”
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