Tankers carrying Russian LNG to Europe have changed course, oil majors such as Shell, BP, and Exxon have pulled out of Russian oil projects at great expense, and now, Italy has suspended its financing for the Arctic LNG 2 project, owned by Russian gas producer Novatek.
The project, estimated at $21 billion, is just one of the many projects that is losing foreign backing, even though Russia’s energy exports have thus far been exempt from sanctions. Italy, fearing more sanctions, is now rethinking its loan to the project, which some estimate at $560 million. Italy had only recently decided to help finance the project. The loan for the project had not yet been dispersed.
The agreement to finance part of the project, however, remains intact.
The latest move highlights just how much of a pariah Russia has become on the world stage after its invasion of Ukraine, and could put a damper on some of Russia’s energy projects.
Arctic LNG 2 was destined to be up and running by 2023, reaching full capacity by 2026. Arctic LNG 2 is expected to produce 20 million tonnes of LNG annually.
In addition to Russia’s Novatek, Arctic LNG 2 shareholders include TotalEnergies, CNPC, CNOOC, and Japan Arctic LNG. TotalEnergies, with a 10% stake, is one European oil major that has not decided to quit its Russian operations.
The Arctic LNG 2 project was already controversial even before Russia’s invasion of Ukraine, with the European Parliament stating that it was concerned about EU members’ support of the project because it was not compatible with climate targets.
