U.S. sanctions halt gas supplies from Russian LNG project - Bloomberg

The start of deliveries from Russia's new Arctic LNG 2 project will be postponed as the company has declared force majeure on supplies due to U.S. sanctions.

This news led to an increase in gas prices in Europe. According to Ukrinform, Bloomberg reports this with reference to informed sources.

Russia's Novatek, which operates the Arctic LNG 2 project, has sent force majeure notices to some of the project's buyers. According to the sources, the sanctions imposed by the United States against the project in November have made it impossible to supply gas.

Although the prospects for Arctic LNG 2 have already been clouded by the U.S. measures, this move poses significant challenges for the project and could limit additional LNG supplies to the global market this winter, the article says.

Novatek planned to launch production on the first of the three lines by the end of this year with the aim of receiving the first deliveries from the plant in early 2024.

Force majeure does not necessarily mean that LNG will not be exported from the Arctic LNG 2 but only that external factors are likely to prevent Novatek from fulfilling all of its contractual obligations, Jake Horslen, an analyst at Energy Aspects, said.

European gas prices rose by 8.3% before rising by 2% to reach 34.20 euros per megawatt-hour. Novatek shares rolled back the gains made earlier in Moscow, falling as much as 4.8% to hit their lowest since July, the article says.

In addition, Arctic LNG 2 is crucial in Russia's quest to more than triple its LNG production by the end of the decade. The plant is also set to provide a significant portion of the gas supplies next year, Talon Custer, an analyst at Bloomberg Intelligence, said.

As reported, in September, the Russian gas monopoly Gazprom delivered its first cargo of LNG to China via the Northern Arctic Sea Route. The ship was on the road for one month.