Sanctions without sanctions: Europe reduces purchases of Novatek LNG quietly

Alexey Gromov, Principal Director on Energy studies, and Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Novye Izvestia on the prospects for the EU countries to abandon the import of Russian LNG and transit of Russian pipeline gas through Ukraine.

In 2023, Russian LNG supplies to Europe amounted to about 13%. The distribution of places in the top suppliers — the United States in the first place, Qatar in the second — indicates in whose interests the ban is being lobbied. First of all, American companies are displacing Russian liquefied natural gas. But the situation is ambiguous.

France has a special position on Russian LNG. French Total Energy participates in both Novatek projects in Yamal and in the Arctic. In case of a ban, the company will have to write off multimillion-dollar losses, Alexey Gromov says:

— The French are making good money on the Yamal LNG project. There are long-term contracts there. All restrictions, if they are announced en masse for the entire Russian LNG, will result in direct losses, primarily for the French company, which is also in the shareholder structure of the project and is one of the main consumers of its products.

Alexey Belogoryev describes the situation as follows:

— For Yamal LNG, if we are talking about NOVATEK, four major importers play a key role — the Netherlands, Belgium, France and Spain. Last year, these countries agreed that the EU would have no common position, there would be no common embargo, and each country would decide on its own when to abandon Russian gas. The only thing was that a mechanism was proposed, which was agreed in December, by imposing restrictions on access to infrastructure facilities. In this case, terminals. Ships with Russian gas will not be able to enter these terminals and unload at the ports of this country. This is an indirect ban on imports.

The most uncertain situation remains with the Arctic LNG-2 plant. Contracts for the shipment of products and the supply of tankers are not executed, but they are not canceled either. The company announced that the first shipments would begin in February. Winter has passed, and Novatek remains silent, from time to time there are messages that clarify the situation little, Alexey Gromov says:

— We know that the project has been launched, production facilities are ready, test production and the first batches of LNG have been produced at this project. But I don't know if there are commercial supplies from there. To be honest, NOVATEK would have reported this. There are no such reports yet. It seems to me that the project, from a commercial point of view, has not yet been launched. Based on this, it can be indirectly assumed that the problems that we are currently discussing and discussed earlier have not yet been resolved.

Most of all, the consortium members — Japanese companies — are concerned about secondary sanctions, which they may fall under if they supply Arctic LNG-2 with ice gas carriers. And this problem is being solved not in Tokyo, but in Washington.

— The contracts have not been terminated, but their legal status is not entirely clear, especially since a number of Japanese companies seem to have submitted applications to the US administration for exemption from sanctions, but it is unclear what kind of bureaucratic promotion there is, —Alexey Belogoryev confirms.

Tankers and the dangerous year 2025

Last year, Novatek already tested LNG supplies to China, but it is far from regular flights. And it is not a fact that it is expected in China, rather, we can talk about Southeast Asia, experts point out. You can sell products, but costs are rising. First, Asian buyers will demand — and receive — a discount. Secondly, the delivery time will increase threefold.