Chinese companies are seeking U.S. approval for a request exemption a new Russian liquified natural gas (LNG) plant from being sanctioned. This is part of a trend where companies aim to prevent disruptions to energy supplies necessary for heating households and the various economic sectors that will be affected by a disruption to the energy supply chain.
Chinese state-owned oil companies Cnooc Ltd, and China National Petroleum Corporation (CNPC), both own a stake in the Novatek PJSC Arctic LNG 2 project in Russia. The two companies are preparing to ask the U.S. for sanctions exemptions to avoid jeopardizing deliveries of fuel supplies, according to sources familiar with the matter, as reported by Bloomberg.
The U.S. has already imposed sanctions on the plant in November in its efforts to increase pressure on Russian companies following Russia’s invasion of Ukraine.
LNG-carrying vessels could be sanctioned by the U.S. if they transport fuel from Arctic LNG 2, according to sources familiar with the plans. To avoid U.S. sanctions, Cnooc and CNPC are buying fuel from American suppliers, the people added.
China is the world’s biggest buyer of LNG. One of its major suppliers is Russia which supplies it with large quantities using its overland pipeline network.
China’s request for sanction exemption is considered rare, as it usually finds ways around restrictions. For instance, China has been receiving Russian oil shipments with the help of the latter’s “dark fleet”, which is composed of various tankers with loose connections to the oil industry and can conceal their cargo’s origin.
LNG vessels, on the other hand, are designed to transport the super-chilled gas from massive export facilities making it nearly impossible to conceal their movements.
Meanwhile, Arctic LNG 2 exports are likely to be delayed following Novatek’s force majeure on several shipments to a number of its buyers after being targeted by US sanctions. Novatek planned to start production by the end of the year and begin shipments by early 2024.
