French energy giant TotalEnergies has initiated a force majeure process on the Novatek-operated Arctic LNG 2 project in Russia due to sanctions.
In November 2023, the US government issued new Russia-related sanctions due to the war in Ukraine, including for the Arctic 2 LNG project.
“We have initiated the force majeure process in accordance with existing contracts, and we will comply with applicable sanctions regimes in accordance with our principles of conduct,” a spokesman for TotalEnergies told LNG Prime on Wednesday via email.
“Consequently, no offtake of LNG from Arctic LNG 2 by TotalEnergies is planned in 2024,” he said.
In March 2022, TotalEnergies said it would no longer provide capital and book proven reserves for the Arctic LNG 2 project due to the uncertainty created by the technological and financial sanctions on the ability to carry out the development.
After that, TotalEnergies wrote down its 19.4 percent stake in Novatek and withdrew the representatives of the company from the board of Novatek
TotalEnergies holds a 10 percent stake in the 19.8 mtpa Arctic LNG 2 development, and a 20 percent in Novatek’s Yamal LNG project.
Arctic LNG 2
In August last year, Novatek completed the installation of the first gravity-based structure platform which will serve its Arctic LNG 2 project located on the Gydan peninsula.
According to reports in Russia, Novatek started production of LNG from this unit in December and expects to ship first cargoes soon.
However, the firm also issued force majeure on Arctic 2 LNG supplies to its customers due to US sanctions imposed on the project in November last year, the reports said.
The first GBS, or train, has a capacity of about 6.6 mtpa, such as the the two other units which are under construction.
The resource base of the Arctic LNG 2 project is the Utrenneye field located on the Gydan Peninsula in the YaNAO, about 70 km from Novatek’s Yamal LNG project across the Gulf of Ob.
Novatek is the LNG project’s operator with a 60 percent stake, TotalEnergies owns 10 percent, while CNPC and CNOOC of China have 10 percent, each.
Japan Arctic LNG, a consortium of Mitsui & Co and Jogmec, owns a 10 percent stake in the project as well.