Russia’s efforts to continue shipping from its sanctioned Arctic LNG2 facility are clearly running into difficulties as tankers in its “dark fleet” have been unable to make a delivery since early August, according to reports.
In total, five shipments of LNG were undelivered by mid-September, according to gCaptain. The Everest Energy and the Asya Energy, both sanctioned tankers belonging to Russia’s “dark fleet,” have been picking up LNG at the Arctic LNG2 facility and unloading it on the Saam FSU storage barge, satellite images and ship tracking data show, according to the Financial Times.
In a risky move that show’s Russia’s desperation, Everest Energy, sailing under the Palauan flag with its protection and indemnity (P&I) insurance status unknown, has been navigating areas usually off-limits to vessels that are not ice breakers to reach the Arctic LNG2 site, according to gCaptain. This route is only feasible to the Everest Energy because the ice is usually at its lowest point in mid-September, gCaptain said.
Thanks to Western sanctions, Russia has been forced to store, rather than sell, the LNG it is obtaining from its Arctic LNG 2 refinery, which receives natural gas extracted in the arctic and condenses it to enable efficient shipping as LNG.
Poor negotiating position
The Western sanctions have been sufficiently thorough to make the hoops that most buyers would have to jump through too tedious. Novatek, a sanctioned private energy company, has been forced to agree to accepting lower prices from the only buyers left in the market, China and India. Novatek’s negotiating position gets worse for every ship that is stopped due to the sanctions.
Novatek has multiple ships that have been caught flying suspended flags and two ships, the Pioneer and the New Energy, have been idle in the north of the Suez Canal for two weeks, according to gCaptain.
While the ships are prevented from reaching their destinations, they will lose about 0.15-0.25 percent of their cargo a day due to boil-off loss, according to gCaptain. This could end up totaling to about 10%-15% of the cargo.
“It is definitely an uphill battle for Novatek,” said Sergey Vakulenko, senior fellow at the Carnegie Endowment for International Peace, according to the Financial Times. “The US seems to be much more purposeful [in imposing sanctions] when it comes to Arctic LNG 2” compared with its actions on oil. “But over the years Novatek has proven themselves as an adept operator. There is some chance that they will find a way around all of this.”
