Ever-tighter sanctions against Moscow have left a South Korean shipbuilder working to find buyers for specialized vessels planned to serve Russia’s newest liquefied natural gas facility, threatening to delay exports from the Arctic project.
Russia’s Sovcomflot PJSC ordered the vessels in 2020, specially tailored for use at the Novatek PJSC-led Arctic LNG 2 export plant above the Arctic Circle. However, the agreement was discontinued after the invasion of Ukraine, and ownership reverted to the shipbuilder.
South Korea’s Hanwha Ocean Co. said this week by telephone that it was still striving for an alternative shipping company keen to take the icebreaker-class gas carriers. Due to the technical nature of the ships, the process was taking longer than expected.
Hanwha said Western restrictions were not particularly to blame for the time lag. Any buyer, however, would have to agree to work with Russia. Actually, the only market where icebreaker LNG vessels are needed to navigate frigid northern waters. Most likely on a project sanctioned by Washington last year.
In November, the US specifically targeted restrictions on the operator of the Arctic LNG 2 export plant. All but forcing out investors, including France’s TotalEnergies SE and Japan’s Mitsui & Co., which have declared force majeure.
Only when a new owner is found can vessels be launched, making it hard for the Arctic facility to export the LNG it began making in December. Russia, eager to expand LNG exports to replace once-core European markets, had most recently aimed to begin exports as soon as this month.
“Ice-breaking tankers are important, especially for the Arctic LNG 2 project, which will send LNG to Asian countries,” said Herve Baudu, a senior lecturer of nautical sciences at the French Maritime Academy. “With the US sanctions, Novatek is finding it very challenging to recover the tankers built by the Koreans. So, Russia is in a bind.”
Novatek, which has a 60% stake in Arctic LNG 2, did not respond to requests for comment.
Sanctioned Ships Threaten Russia’s Arctic LNG Ambitions
Arctic LNG 2 is a fundamental plank of Russia’s efforts to cope with the dramatic decline of pipeline gas deliveries to Europe since 2022 by boosting LNG exports, hoping to capture new markets. Moscow desires to expand LNG exports three-fold by the end of the decade.
However, the icebreaker ships needed for the expansion have become a major headache.
Hanwha Ocean continues to hold three fundamental vessels:
1)Pyotr Kapitsa
2)Leve Landau
3)Zhores Alferov
in shipyards in South Korea.
Three of the other ships, Hanwha Ocean, are Mitsui OSK Lines Ltd owns the building. Last month, Mitsui OSK Lines Ltd said it could no longer charter the ships to the Arctic LNG 2 project as planned because of sanctions. They are figuring out how to sell them. The first batch of vessels will complete its construction later this year.
The French Maritime Academy’s Baidu said Novatek has an existing fleet of icebreaker vessels. Customers have already chartered them to ferry LNG from the unsanctioned Yamal export plant.
Russia is trying to find a solution. The first three icebreaker LNG carriers to be built domestically. Sergei Witte, Pyotr Stolypin, and Alexey Kosygi. The Zvezda shipyard completed them and received sanctions last month. Eventually, the gas from Arctic LNG 2 could be exported using them.. They are not indicating travel to the facility. They would also still leave Novatek far short of the fleet it will someday need.
