Flex LNG CEO Kalleklev: Russia is Putting Together LNG ‘Shadow Fleet’ and Will Find Buyers

By Malte Humpert (gCaptain) –

The first loading of liquefied natural gas aboard a “dark vessel” at Russia’s Arctic LNG 2 confirms months of speculation that the country’s largest LNG producer Novatek may be assembling a “shadow fleet.” 

Some industry experts had cautioned that the limited size of the global fleet and much fewer loading and unloading ports would make such a move infeasible. But others, including Flex LNG CEO Oeystein Kalleklev, have long insisted that Russia was putting the pieces into place.  

“Quite a few experts have been saying that this couldn’t be done, but we have seen Russia putting together a fleet and they will find friendly buyers just like in the oil business,” Kalleklev told gCaptain.  

Novatek’s Arctic LNG 2 project has been under Western sanctions for months, effectively blocking the export of LNG through conventional channels. 

The vessel in question is the 2005-built 138,000-cbm Pioneer arriving at the Utrenney Terminal on August 1. This contrasts with vessel tracking sites still showing it to the north of Norway. Industry insiders suggest Pioneer spoofed its AIS position to travel to Arctic LNG 2 unseen. 

The vessel was sold in April to Nur Global Shipping out of Dubai and is part of a growing list of recent vessel transfers to entities in the UAE with links to Russian businesses. Earlier this year Novatek subsidiary New Transshipment FZE was reportedly involved in an aborted effort to take ownership of an LNG carrier newbuilt from South Korea.  

A number of LNGC earmarked for Novatek’s Arctic LNG 2 project remain stuck in sanctions limbo further escalating the need to acquire second hand vessels for its shadow fleet. 

“My understanding is that they have bought a couple vessels and will probably continue doing so in order to have sufficient ships for Train 2,” confirms Kalleklev.

Novatek is currently in the process of moving the second production line from the construction yard near Murmansk to the Utrenney Terminal. Once it begins production later this year the company will require additional vessels to transport a further up to 6.6 mtpa of LNG.

Of course, the specter of expanding sanctions looms over Novatek’s Arctic projects and logistics chain. The EU recently announced that beginning in March 2025 it will ban the transshipment of Russian LNG, including from the thus far unsanctioned Yamal LNG project. 

Establishing a shadow fleet now will thus eventually also facilitate hitherto unsanctioned aspects of Novatek’s operation.

“It wouldn’t surprise me if they buy some extra [vessels] in case of sanctions, which could pull LNGCs chartered-in from owners based in the West/OECD away,” Kalleklev agrees. 

Novatek also aims to receive at least two domestically-produced ice-capable LNGC by the end of the year and in early 2025 to maintain low-level winter operations. 

“It’s a logistic operation for sure, but they have had some time to prepare and learn,” concludes Kalleklev.