U.S. Cracks Down on Russian ‘LNG Shadow Fleet’ and Arctic LNG Project in Latest Sanctions

The U.S. continues its effort to freeze Russia’s burgeoning Arctic LNG sector. In a new round of sanctions the State Department targeted transport and shipping companies providing services to the Arctic LNG 2 project.

“Today’s actions are designed to further promote accountability for entities providing material support to LLC ARCTIC LNG 2,” the State Department press release reads.

The measures target both owners of LNG carriers in service of Arctic LNG 2 as well as companies carrying materials and critical parts to the project.

The State Department designated four Dubai-based LNG vessel operators, LNG Alpha Pte Ltd, LNG Beta, LNG Delta and LNG Gamma. They are the registered owners of four previously blocked new build LNG carriers: North Air, North Mountain, North Way, and North Sky. 

All four were originally intended to operate in service of the thus-far unsanctioned Yamal LNG project. 

However, with a medium Arc4 ice classification they could have also expanded Russia’s ice-capable export capacity for Arctic LNG 2 prompting the U.S. to sanction them in August 2024. The U.S. had already designated the vessel’s management company White Fox Ship Management. The owners now follow in this latest round of sanctions. 

Another UAE-based entity, New Transshipment FZE, was also designated. The company had long-been rumored to be affiliated with Novatek as internal company reports suggested. Based on the State Department press release it is a fully-owned subsidiary of Novatek and affiliated with LNG Alpha, Beta, Delta and Gamma.

The confirmation that Transshipment FZE is controlled by Novatek also sheds new light on the entity’s efforts to acquire a South Korean-build Arc7 LNG carrier earlier this year. The transaction was aborted before it could be executed but several shipping databases indicated a proposed ownership change.

The targeting of shipping operators has proven an effective tool in interdicting the flow of LNG produced at Russia’s flagship project, Arctic LNG 2. Just two months after production and exports began, the plant’s majority owner Novatek, decided to cease production for the winter months. None of the first eight shipments have thus far found a buyer as more than one million cubic meters of LNG remain undelivered.

In a sign that U.S. actions aren’t limited to the transport and sale of superchilled gas, but also target the construction of the Russian Arctic LNG 2 plant, the new sanctions designate Abu Dhabi-based construction company Smart Solutions Ltd.

The company chartered two previously blocked heavy lift vessels, Audax and Pugnax, to deliver prefabricated modules from China to Russia. 

“Smart Solutions provided various Gravity-Based Structure parts to U.S.-designated LLC ARCTIC LNG 2. Smart Solutions was the charterer of the blocked vessels Audax and Pugnax, vessels that delivered liquefaction modules and other critical materials for LLC ARCTIC LNG 2,” the announcement reads.

Those sanctions actions are especially relevant as modules manufactured at Chinese engineering procurement construction company Wison New Energies are currently being unloaded at the Arctic LNG 2 Utrenniy terminal.

Two heavy lift-vessels, Ocean 28 and Nan Feng Zhi Xing, arrived dockside early on October 30 after a five-week voyage through ice-covered Arctic seas. They carry critically-needed power generation equipment without which the plant’s second project line can not be commissioned. 

Nan Feng Zhi Xing had already been designated, but Ocean 28 as well as module manufacturer Wison New Energies were not included in this latest round of sanctions.

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