- Winter ice to slow Arctic LNG 2 shipments.
- US warns of sanctions risk over Arctic LNG 2.
- Westbound La Perouse raises India questions.
A recent surge of Arctic LNG 2 shipments to China over the past ten days has helped alleviate supply shortages and driven down Asian spot LNG prices. However, as the Northern Sea Route prepares to close for conventional tankers, we can expect a slowdown in deliveries soon, reports S&P Global.
Winter Shipping Constraints Ahead
The Iris is set to be the fifth sanctioned vessel arriving shortly, but as Arctic ice begins to block routes, shipments will inevitably slow down. A source from the European market mentioned that starting mid-November, when the ice obstructs the path, they won’t be able to move cargoes out via the NSR. “Among the LNG carriers that have transported Arctic LNG 2 cargo to Asia, only the Arc 7 class vessel Christophe de Margerie will be able to conduct a maximum of two round trips per month,” said Daisuke Harada of Japan’s Organisation for Metals and Energy Security.
“During the winter, five LNG carriers currently transporting Arctic LNG 2 cargoes to Asia will load in Kamchatka and Murmansk, supplying at a pace of two to three cargoes per month,” Harada added. Eric Yep of Commodity Insights noted: “Arctic LNG 2 volumes will likely be hampered as Arctic trade routes get more hazardous in winter, and shipments will start to slow.” He added, “The project’s access to Arc7 Ice-class LNG carrier newbuilds has already been cut off by sanctions.” “There is still some uncertainty around a US response on breaching of sanctions and the buyer/s of the Arctic LNG 2 cargoes have still not been publicly identified,” Yep said.
US Sanctions Warnings
The US has issued a warning that engaging in business with Arctic LNG 2 carries a significant sanctions risk, according to a State Department spokesperson who spoke to Platts on September 10. The Beihai terminal, operated by PipeChina, boasts a capacity of 6 million metric tons and is supported by major oil companies, including PetroChina, Sinopec, and CNOOC.
Westbound Shipment Raises Questions
The La Perouse, loaded at Arctic LNG 2 on Aug. 27 and is the first to sail west. The UK sanctioned the vessel in 2024.
“Don’t think volumes from that can come to India. Indian public sector companies would not be able to absorb that [Arctic LNG 2] volume,” an Indian market source said. Another added: “We have not even been approached with offers for any spot volumes [from Arctic LNG 2].” The project is majority owned by Novatek (60%), with stakes held by TotalEnergies, CNPC, CNOOC, and Japan Arctic LNG.
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Source: S&P Global
