Japanese and French investors have suspended funding for a $ 23 billion project by Russia’s private gas company Novatek to build a liquefied natural gas plant in northern Russia.

According to the Japanese news agency Nikkei , the reason for this decision was economic sanctions against Russia for its invasion of Ukraine, which blocked financial institutions the ability to transfer funds needed to finance the project.

According to the agency, the freezing of funding for Arctic LNG 2 is the first known such case for a resource project in which Japanese companies have a stake.

The move could delay its launch, scheduled for 2023, and, as a result, a revision of Japan’s gas purchasing strategy, which called for increased imports from Russia.

Russia’s Novatek gas group owns 60% of Arctic LNG 2, while Chinese companies own another 20%. The French energy group Total Energies owns 10% of the shares, and the Japanese Mitsui & Co. and Japan Oil, Gas and Metals National Corporation (JOGMEC) together also have 10%.

On March 15, the European Union banned new investments in Russia’s energy sector. The joint venture between Mitsui and JOGMEC is located in the Netherlands and is unable to transfer funds from the Netherlands to Russia, but plans to retain its stake in it for the time being.

French Total also announced on March 22 a freeze on investments in Arctic LNG 2. The company has already invested $ 2.5 billion in the project.

The $ 21.3 billion Arctic LNG 2 project involves the construction of three queues for the production of liquefied natural gas with a capacity of 6.6 million tons per year each in the Yamal-Nenets Autonomous District of the Russian Federation.

As of the end of 2021, the overall readiness of the project was estimated at 59%, first of all – at 78%.

At the end of last year, Arctic LNG 2 agreed to attract project funding of 9.5 billion euros and has already repaid part of the contribution made by NOVATEK (the largest shareholder in the project). The project company is unable to raise dollars due to US sanctions imposed in 2014.

In the total project funding of 9.5 billion euros, the share of “financial institutions of OECD member countries” will be “up to 2.5 billion euros, including JBIC and other creditors insured by export credit agencies”, of which the Japanese side was to be 1 , 71 billion euros.

It was planned that another 2.5 billion euros will be provided by Chinese financial institutions, including state-owned banks in China. The remaining 4.5 billion euros were to come from Russian banks. Джерело: https://biz.censor.net/n3328519

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