September 5, 2024
All three tankers in the shadow LNG fleet that attempted to transport fuel from the US-sanctioned Arctic LNG 2 project never delivered it to buyers. Two of them headed instead to a floating storage facility near Murmansk. The longer LNG sits on ships, the more it is lost during transportation.
In early August, the Pioneer tanker arrived at Novatek’s Arctic LNG 2, about 10 days later – Asya Energy, and 10 days later – Everest Energy, Bloomberg reported . The first of them, having rounded Europe, managed to reach the eastern Mediterranean, the second initially headed west after it. But it was not possible to quickly establish deliveries using the shadow LNG fleet, which Russia began to create based on the shadow oil fleet. On August 23, the United States imposed sanctions against these tankers and the Indian company Ocean Speedstar Solutions, which was registered in June and manages only these three ships.
Pioneer transferred fuel to another, unsanctioned tanker in Port Said, Egypt, in late August, and both vessels have remained there since, the Financial Times reported , citing satellite images and ship tracking data. And Everest Energy, according to the newspaper, docked at the world’s largest floating storage facility, Saam FSU, in the Murmansk region, apparently unloaded LNG, and headed back to Arctic LNG 2. The tanker Asya Energy, which initially sailed west around Norway, returned to Russian waters and is now near Saam FSU, according to ICIS ship tracking data.
Pioneer and Asya Energy tried to hide their calls at the Arctic LNG 2 plant, located east of the Yamal Peninsula. While they were sailing to pick up cargo, their transponders showed that they were supposedly in the Barents Sea, northeast of Norway. Following the recent imposition of sanctions on the tankers, the Republic of Palau, the Pacific island nation under whose flag they were sailing, suspended their registration, the FT and specialist publication gCaptain report. The vessels lost their registration pending an investigation on suspicion of deactivating or mistransmitting their transponders during their voyages to the sanctioned Arctic LNG 2 project, gCaptain reports .
Since the shadow fleet consists of older tankers, LNG losses during transportation, which can reach 0.25% of cargo per day, are becoming a problem, the newspaper notes: “Pioneer took delivery on August 3, so a month later the potential losses are approaching 7.5%.” Asya Energy is a slightly newer vessel, but its losses can already reach 3-4% of cargo.
The 360,000 cubic meter Saam UGS storage facility, built for Novatek’s marine transshipment complex in the Murmansk region, has not yet been used. Transferring LNG to the storage facility will reduce losses from its storage on the tanker, gCaptain notes. It “highlights the problems Russia is having in finding buyers for its sanctioned LNG,” Kpler analysts write.
Kjell Eikland, managing director of Norwegian consultancy Eikland Energy, told the FT:
If there was any interest among buyers [before the latest US sanctions], it has certainly disappeared now.
Vladimir Putin had placed a big bet on the Arctic LNG 2 project, run by Leonid Mikhelson, the head of Novatek. It was to make a major contribution to the planned tripling of LNG production to 100 million tons by 2030. With three production lines running at full capacity, Arctic LNG 2 should produce almost 20 million tons.
Exports were supposed to start earlier this year, but sanctions imposed in late 2023 prevented them. Train 1 is currently operating at just under 50% of its nominal capacity because sanctions mean there is no one to ship the gas to, says Mehdi Tuil, lead LNG specialist at Calypso Commodities. At that level of production, Saam UGS can provide about 16 days of buffer storage — or “up to 27 days if [train 1] is running at 30% capacity, which is the minimum required to support the liquefaction process.”
Sanctions could be so wonderful if they did what they are supposed to do.