The U.S. government has issued a stern warning that any entity doing business with Russia’s Arctic LNG 2 project, including processing its transactions, faces a significant risk of sanctions. This warning comes after several sanctioned Russian LNG carriers delivered cargoes to a terminal in China.
Sanctions and Cargo Deliveries
The U.S. State Department has reiterated that sanctions against Russia and Arctic LNG 2 remain in place. The department’s statement follows recent reports of at least three sanctioned Russian LNG carriers—the Arctic Mulan, Voskhod, and Zarya—discharging their cargoes at the Tieshan terminal in the Port of Beihai, China, since late August. Two more sanctioned ships, the Buran and Iris, are also sailing toward a similar destination. These deliveries signal a continued trade relationship despite international restrictions, prompting the U.S. to emphasize the risks involved for any company, including foreign financial institutions, that assists with these transactions.
China’s Role
The Beihai LNG terminal, which has a significant receiving capacity, is operated by China’s state-owned PipeChina. This company, in turn, is owned by major state-owned enterprises like PetroChina, Sinopec, and CNOOC. The U.S. government has noted that it has previously sanctioned China-based entities for their involvement with Arctic LNG 2. The recent arrivals of sanctioned vessels at a terminal run by a Chinese state-owned company highlight the direct and significant nature of the trade.
The Arctic LNG 2 Project
The Arctic LNG 2 project, which recently resumed loadings, is a major Russian energy venture. While Russia’s Novatek holds the majority stake, it has international partners from several countries, including France’s TotalEnergies, China’s CNPC and CNOOC, and Japan’s Japan Arctic LNG. The project’s continued operations and exports to China, often using a sanctioned fleet of carriers, underscore the complex geopolitical and economic factors at play in the global energy market. The recent movements of these sanctioned ships, including one that traveled a new western route along the Northern Sea Route, show an effort to maintain trade flows despite the sanctions.
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Source: S&P Global
