HomeMediaLatest NewsMedia: Novatek warned some LNG buyers about a possible supply disruption

Media: Novatek warned some LNG buyers about a possible supply disruption

21 December 2023

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented on the reasons and consequences of declaring force majeure on a number of contracts for the LNG supply from the first stage of the Arctic LNG 2 plant to Business FM:

"We do not know the details, that is, all that is known is short leaks in Western agencies. I think this is legal insurance for Novatek against possible supply disruptions. It is difficult to say how critical and permanent these interruptions will be. I think that some ways of circumventing these sanctions will be found, but it's a matter of time. Apparently, Novatek didn't have enough time. Force majeure concerns a certain number, we do not know, it is unlikely that we are talking about all the contracts that Novatek has concluded, because another 40% of the LNG that is produced is distributed among foreign shareholders. I don't think they can have force majeure in this case.

As for those contracts that were somehow connected with the plant operator, against whom the United States imposed sanctions in November, there may be legal problems here. Most likely, they can be bypassed one way or another. Arctic LNG 2 remains an extremely popular project. In this case, the United States has hurt the entire global LNG market, because, strictly speaking, in the first half of 2024, this is almost the largest project that was supposed to be put into operation, and this seriously reduces the supply of LNG and threatens such a moderate shortage in the market in the second and third quarters. When the plant will be able to reach the design volume in terms of commercial shipments, this is now an open question. I think it's still around the turn of 2024-2025."

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