Breaking: U.S. Sanctions Additional LNG Carriers In Effort to Deep Freeze Russia’s Arctic LNG 2

By Malte Humpert (gCaptain) –

Just days after sanctioning seven LNG carriers associated with Russia’s flagship liquefied gas project, Arctic LNG 2, the U.S. State Department doubled down on its efforts to stop any flow of LNG in its tracks.

The State Department announced new measures against two LNG carriers and two shipping operators aiming to further degrade Russia’s ability to operationalize the Arctic LNG 2 project.

In contrast to previous sanctions packages, often months in the making, the U.S. has launched several rounds of measures against Russian LNG in increasingly quick succession. These latest blocking measures constitute the third round in as many months.

“The United States is sending a clear message with today’s actions: attempts to operationalize the sanctioned Arctic LNG 2 (ALNG2) project will continue to be met with a swift U.S. government response, said Assistant Secretary Geoffrey R. Pyatt in a written statement to gCaptain.

“Today’s designations build on our sanctions actions less than two weeks ago that targeted other entities involved in the first attempts to export cargo from ALNG2.  Collectively, our actions continue to restrict Russia’s ability to bring the ALNG2 project fully online,” Pyatt continued.

Five weeks after Pioneer loaded the first Arctic LNG 2 cargo, Novatek, the project’s majority owner, has yet to complete its first delivery to a customer highlighting the difficulties the company will likely face to find buyers and effectively utilize its nascent shadow fleet. 

“As I predicted last year, LNG is not crude oil and replicating shadow practices borrowed from other liquid hydrocarbons are doomed to fail. With a limited fleet, diminished flexibility and a shrinking pool of buyers, finding alternative routes for “off-the-books” Russian LNG was already extremely difficult, and this difficulty has only intensified,” explains Mehdy Touil, LNG operations specialist at Calypso Commodities.

The latest sanctions target two vessels associated with Arctic LNG 2, carriers New Energy and Mulan.

New Energy received sanctioned product from another carrier, Pioneer, in a ship-to-ship transfer north of the Suez Canal just one week ago, again highlighting the rapid response of the State Department. Pioneer had picked up liquefied gas from Arctic LNG 2 just over a month ago, becoming the first vessel of the shadow fleet.

New Energy may now also be faced with the suspension of its flag. Like three other vessels of the dark fleet, Pioneer, Asya Energy, and Everest Energy, it is registered in Palau, an island state in the western Pacific. Palau’s registry temporarily suspended the registration of the three vessels pending an investigation.

Additionally, the sanctions also target New Energy’s registered owner and commercial manager: Gotik Energy Shipping Co (Gotik) and Plio Energy Cargo Shipping OPC PVT LTD (Plio Energy). 

A further vessel, managed and operated by Plio Energy, LNGC Mulan, has also been sanctioned. Mulan also holds a Palau registration. 

“The so-called ‘shadow’ LNG fleet is still very small. This means that vessels within the fleet can be picked up fairly easily via satellite images as we generally know where to look for them – at Utrenniy, Saam FSU and a few other locations,” confirms Ben Seligman, a project specialist for Arctic oil and gas development.

“So, while the fleet remains small, they will be easy pickings for the U.S. State Department and Treasury Department,” Seligman concludes.

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