Foreign investors flee Novatek's Arctic LNG‑2 project over sanctions threat, forcing Russia to foot the 25 billion bill
Foreign investors have decided to suspend their involvement in Arctic LNG-2, one of Russia's largest gas projects. This decision is attributed to the risk associated with the sanctions imposed, which might affect the sales, financing, and transport of products associated with this project, as reported by the UNIAN agency.
4:03 PM EST, December 25, 2023
Shareholders Decline Financing
Arctic LNG-2 is a project under the management of Russian company Novatek. Its foreign shareholders, including French TotalEnergies, Chinese CNPC and CNOOC, and the Japanese consortium of Mitsui and JOGMEC, have invoked force majeure regarding their involvement in the project. According to the Russian Kommersant, drawing upon its own sources, this indicates that the shareholders are withdrawing their financial support for the project along with the implementation of gas contracts – as reported by UNIAN.
The journalists stress that the three key components of the project —sales, financing, and product transportation, are now under threat. The investors' denial to finance the project might strip Arctic LNG-2 of long-term contracts, forcing the gas sales to occur on the spot market.
Novatek, leading the project, will be left to finance the investment independently. Its cost has already risen by approximately 17 percent, to $25 billion, due to the requirement to procure additional equipment. The deficit was initially expected to be covered by the shareholders.
