LNG Market Outlook: Sanctions Cloud the Future of Arctic Exports

This current feature was extracted from the latest edition of Poten’s LNG Market Outlook, a monthly service published on November 27, 2023.

Earlier this month, the US imposed additional sanctions on Russia that targeted the Arctic LNG 2 project operated by Novatek. The project will be composed of three trains, each with a capacity of 6.6 MMt. The first train was originally planned for start-up in 4Q 2023, the second train planned for 2024 and third train for 2026.

This recent round of sanctions may cause a delay in the start-up of the first train, with the sanctions targeting non-US entities planning to buy volumes from the project. If the volumes from the project were to enter the market in 2024, trading would probably take place on the spot market (which would evade sanctions) similarly to Russian crude oil exports.

Taking these factors into consideration, LNG exports from the Russian Arctic are forecast to increase from 21.6 MMt in 2023 to 25 MMt in 2024 before increasing by another 1 MMt in 2025 to 26 MM