US Sanctions Prevent LNG Tankers from Accessing Russian Arctic Project

The US has implemented new sanctions targeting owners of LNG tankers being built at the South Korean shipyard Hanwha Ocean for Novatek’s Arctic LNG project in Russia. The sanctions affect companies based in Cyprus that are behind three LNG tankers initially ordered by Russian operator Sovcomflot, all of which were completed. While three additional ships being built for the project by a Japanese company are not affected by the sanctions, the CEO expressed concerns about navigating the expanding sanctions environment.

The sanctions are expected to complicate Novatek’s efforts to secure transportation capacity for its Arctic LNG 2 project further. A recent incident involving a former Sovcomflot ship, Pyotr Kapitsa, saw a change in ownership to a Novatek-affiliated company in the UAE, which was then reversed shortly before the new US sanctions were imposed. This highlights the complexities of operating in a sanctions environment and the challenges faced by companies involved in the project.

Malte Humpert, a senior fellow at The Arctic Institute, focuses on Arctic geopolitics and the impacts of sanctions on shipping in the Northern Sea Route. The sanctions targeting owners of LNG tankers at Hanwha Ocean are expected to have far-reaching effects on Novatek’s ability to transport LNG from its Arctic LNG 2 plant, further complicating the already challenging operating environment.

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