Russian LNG Shipments via Arctic Resume, Easing Red Sea and Sanctions Constraints

By Malte Humpert (gCaptain) –

As Arctic sea ice retreats for the summer months Russia’s Northern Sea Route is again open for business. Days after oil company Gazprom Neft dispatched the first crude oil tanker of the year to Asia via the Arctic, liquefied natural gas (LNG) shipments have also resumed. 

The tanker Eduard Toll departed from Novatek’s Yamal LNG project to Asia on June 21. Making rapid progress at 15 knots it has already entered the Laptev Sea alongside nuclear icebreaker Sibir passing through continuous first-year ice coverage. Eduard Toll completed a historic mid-winter transit without icebreaker support in February 2018.  

AIS does not currently indicate a destination, but the vessel is likely headed to China. In 2023, LNG carriers made 37 deliveries to Asia via the Arctic, with 31 going to China. 

The Arctic shortcut will ease shipping constraints for Novatek, Russia’s largest producer of LNG. 

For much of the past year tankers have had to detour around the Cape of Good Hope since the de facto closure of the Red Sea route. The 6,000 nautical mile trip from Yamal LNG to ports in north-eastern China can take as little as two and a half weeks, compared to six weeks or longer via the Cape.

Western sanctions, including the looming EU transshipment ban on Russian LNG, will also further elevate the importance of the Arctic route. 

EU member states look set to pass measures targeting the reloading of cargos from Russia as early as this week, though it is unclear when the ban will come into effect. Yamal LNG transships 20 percent of its production, around 4 mtpa, via terminals in Zeebrugge, Belgium and Montoir-de-Bretagne, France. 

Additional volumes are transferred via ship-to-ship operations in Russian waters. These transfers are set to rise in 2024. In 2023 Russia completed 13 STS operations in waters north of Murmansk. Through the first four months of 2024 the Kildin anchorage has already seen a total of 10 transfers. 

In anticipation of an EU transshipment ban, Russian authorities have granted a record number of permits for the Northern Sea Route, including eight low ice-class and six conventional LNG carriers. These vessels will be allowed to operate on the route between July 1 and November 15, depending on sea ice conditions. 

While direct routing to Asia via the Arctic offers a seasonal fix, Russia’s LNG logistics chains will remain stretched during winter months. Novatek’s flagship LNG project Arctic LNG 2 has faced headwinds following designation by the U.S. last year. It has yet to make a single delivery since Train 1 officially opened in December 2023. 

Recent activity on the secondhand carrier market and the transfer of a number of newbuilds to an entity in Dubai have also led to speculation of Russia potentially looking to create an LNG “dark fleet.”

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