UPDATE 3-Russia's Novatek shuts down commercial operation at Arctic LNG 2 train, source says

Reuters
2024/10/25
UPDATE 3-Russia's Novatek shuts down commercial operation at Arctic LNG 2 train, source says

Adds background in paragraph 4, detail on LNG tankers and storage in paragraphs 8-12

By Marwa Rashad

LONDON, Oct 25 (Reuters) - Russia's Novatek shut down commercial operations at the first and only operational train of its Arctic LNG 2 project earlier this month with no plans to restart it during winter, one source familiar with the matter told Reuters on Friday.

The train was shut down on Oct. 11, the source said.

Novatek did not immediately respond to a Reuters request for comment.

The Arctic LNG 2 project, 60%-owned by Russia's Novatek NVTK.MM, had been set to become one of Russia's largest LNG plants with eventual output of 19.8 million metric tons per year, but its prospects have been clouded by Western sanctions over Russia's conflict with Ukraine and has struggled to sell the sea-borne gas.

The plant loaded eight LNG cargoes between Aug. 1 and Oct. 7, according to Kpler's data, but failed to find buyers.

"The shutdown of the plant is ultimately a reflection of a lack of appetite from buyers and a lack of Arc7 ice-class vessels needed to lift LNG during the winter months," said Laura Page, manager of gas and LNG insight at Kpler.

"The US has succeeded in its efforts to kill the project, for now. Kpler Insight expects the plant to remain shut until at least next summer, when Novatek will likely re-assess appetite from potential buyers," she added.

Four tankers laden with LNG remain on the water, the Pioneer with a capacity of 138,000 cubic metres, the Asya Energy (137,200 cubic metres) and the Nova Energy (150,000 cubic metres) are in Northeast Asia while the Everest Energy (138,028 cubic metres) is approaching Murmansk.

The tankers constitute 40% of a so-called "dark fleet" of 10 Russian LNG-ferrying vessels identified by Kpler and which have been sanctioned by the West.

Novatek has said media allegations the company was involved in establishing and managing a "shadow fleet" for the Arctic LNG 2 project were untrue.

Other loadings were injected into the Saam and Koryak floating storage units (FSUs) at Murmansk and Kamchatka, respectively.

Kpler believes there is space in the Koryak FSU in Kamchatka to discharge up to two full-sized LNG cargoes, however, the agency said the Saam FSU in Murmansk was likely full, Page said.

(Reporting by Marwa Rashad; Editing by Nina Chestney, Louise Heavens and Emelia Sithole-Matarise)

((marwa.rashad@thomsonreuters.com; +447823669044; Reuters Messaging: marwa.rashad.thomsonreuters.com@reuters.net))

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