LNG

Beihai LNG in Guangxi has discharged 26 cargoes this year to 13 July, and every one of them came from Russia. That intake marks the terminal’s second-busiest first half in eight years, behind only 2024, and ten cargoes more than it took over the same window last year. The berth is working at its usual rate. Nothing else has come through it.

Russia’s Novatek has begun its 2026 summer Arctic LNG shipping season with simultaneous eastbound cargoes from its Yamal LNG and Arctic LNG 2 projects via the Northern Sea Route – in the face of Western sanctions and ongoing technical constraints at Arctic LNG 2.

Ice-class carrier Christophe de Margerie is attempting a seasonally early eastbound transit from Novatek’s Arctic LNG 2 terminal via the Northern Sea Route to Asia, underscoring the Russian company’s efforts to sustain exports to predominantly Chinese buyers.

Arctic LNG 2 is expanding its tanker fleet to re-route exports to Asia ahead of the EU’s planned 2027 ban on Russian LNG imports. The Novatek-led project is estimated to need up to 40 additional LNG carriers to sustain Arctic LNG 2’s targeted export volumes beyond 2026.

The Trump administration is working on ways to ease sanctions against Russia, if the war in Ukraine comes to an end. Greater LNG exports from Vysotsk, Portovaya and the first two 6.6 mtpa trains of Arctic LNG 2 facilities are seen as ‘options’ for the United States to offer a sanctions relief in exchange for peace.

London-based Energy Aspects remains bullish on TTF bal-2025 prices, assuming Russian gas exports to Europe do not return – at least not any time soon. Gazprom had terminated pipeline gas transits through Ukraine at the start of 2025, and Russian LNG is currently mainly reaching Europe via the Kremlin’s shadow fleet of ageing tankers.

Enabling Russian LNG exports under a US sanction relief would contradict American commercial interest and President Trump’s ‘energy dominance policy.’

Yet, foreign policy of the new US administration is anything but certain: “It is possible that Trump’s drive for peace and to see Russian gas return will override his energy dominance policy and desire to narrow the trade deficit with Europe. We are not yet making this our base case, as Trump has other sanctions relief measures he can deploy,” Energy Aspects stated, referring to options like loosening US financial and trade sanctions that impact the whole Russian economy.

Brokering a peace deal will take time, and may well be month away as the positions still differ starkly. The longer it takes, the less time would be left for Russian gas supply to help bolster Europe’s stock-build prior to the next winter.

Expiry of US Treasury waivers impact Russian exports via Turkey

Supply risks escalated after temporary US Treasury waivers that permit gas purchases via the now-sanctioned Gazprombank will lapsed.

The US Treasury confirmed the General License 8L expired as scheduled on Wednesday last week as the Trump administration is putting pressure on Russia to improve his and Ukraine’s stance in peace talks with the Kremlin. Letting the license expire means that Russian banks now can no longer access US payment systems for energy financing or transactions related to oil and gas exports.

If no alternative payment mechanisms can be agreed, Europe might lose out on the 16 bcm/y that is shipped to European buyers through TurkStream, the 24 bcm/y shipped to Turkey through TurkStream and Blue Stream pipelines. Moreover, the 38 bcm/y of Russian gas exported to China through Power of Siberia pipeline and potentially around 5–10 bcm/y transported to buyers in Central Asia is also at risk.

Doubts mount that the US Treasury will extend waivers following of Russia’s bombardment of Ukrainian gas and power infrastructure in recent weeks. Destructions and halted gas flows from Gazprom made Naftogaz turn to elsewhere for supply. Ukraine has, in fact, stepped up its imports from Europe over recent weeks and Energy Aspects expects it to take 1.7 bcm from Europe this year, in contrast to net exports of 0.7 bcm last year, cautioning there is “more upside than downside risk” to these numbers.

The Japan Organization for Metals and Energy Security, a national agency with a stake in the Russian Arctic LNG II project operated by the Novatek natural gas company of Russia, is likely to put Japanese LNG needs over Western sanctions as Japan did when keeping cargo rights from Sakhalin LNG.

“Strengthening mutually beneficial relationships with resource-rich countries is essential for developing oil and natural gas resources,” said the Japanese agency known as JOGMEC.

“As a governmental organization, JOGMEC conducts various projects to support Japan’s resource diplomacy, collaborating with national oil companies and providing technical support for producing countries,” it added in its latest statement on policy.

While Japan like other nations has condemned Russia's invasion of Ukraine it has continued to keep stakes in the Sakhalin LNG plant in the Russian Far East and other energy projects.

Novatek controls 60 percent of the Arctic LNG II project and its other remaining active partners are from China and Japan.

Consortium

They are China National Petroleum Corp., China National Offshore Oil Corp. and a consortium comprising the Japanese trading company Mitsui & Co. and JOGMEC.

Mitsui has said that while it would comply with any sanctions requirements it would take its final guidance from the Japanese Government.

In the case of Russia’s Sakhalin LNG, Japanese companies Mitsui and Mitsubishi maintained their stakes and offtake with the government saying at the time that if Japan ceded its offtake rights they would likely be taken up by China.

Another energy security issue facing Japanese utilities and LNG importers is that Australia could become an unreliable LNG supplier in the future as labor unions begin to exercise control and more hardline policies at LNG plants, readily backed by key members of the governing left-wing and anti-hydrocarbon Labor party.

This action has resulted in a series of strikes and work stoppages at four facilities in Western Australia, raising security of supply concerns in Asia.

Analysts said that crucially the Japanese have a large offtake portion from the Arctic LNG II project on the Gydan Peninsula that is expected to come on stream in early 2024 and they were unlikely to give this up.

Japanese offtake

The Japanese have basic offtake rights from the Gydan venture to 2 million tonnes per annum and could increase that total.

Arctic LNG II will have three liquefaction Trains, each with 6.6 MTPA of capacity.

One of the Trains is already on site after being towed from a construction yard in the Murmansk Region on a gravity-based structure and deployed in the bay where the plant is located.

The biggest Arctic LNG shareholder, Novatek itself, has been signing multiple additional sales and purchase agreements with Chinese LNG players such as the ENN Group and Zhejiang Energy Gas Group.

The ENN SPA stipulates cargoes from Arctic LNG II will amount to a total of 600,000 tonnes per annum will be delivered over a term of 11 years.

LNG deliveries to ENN will be on a ex-ship (DES) basis whereby Novatek supplies the shipping to ENN’s Zhoushan LNG receiving terminal in eastern China. 

The Netherlands said that almost a year after Russia invaded Ukraine, the country had virtually stopped importing energy from Russia, though received about the same amount of Russian LNG in 2022 than in the previous year and was looking at setting up new LNG import terminals and joint purchasing global cargoes with the European Union.

Gaztransport and Technigaz (GTT), the French designer of LNG storage tanks for ships and for onshore including record licensing orders for LNG carrier membrane tanks, has decided on a full withdrawal from contracts for Russian ships and projects.

GTT has been involved in tank design for 15 ice-breaker LNG carriers currently being built at the Zvezda Shipbuilding Complex (Zvezda) in the Russian Far East and for the design of three gravity-based storage tanks for other projects.

The Paris-based company said that as of October 1, 2022, revenues of €74 million ($80M) remained to be recognised for the ice-breaking LNG carriers by 2025 and €12M for the GBSs by 2027, which was a total exposure representing less than 6 percent of the order book.

“Following an in-depth analysis of European sanction packages No. 8 and No. 9 notably prohibiting engineering services with Russian companies, the group announces that it is ceasing its activities in Russia,” stated GTT.

The company explained that as of January 8, 2023, the contract with Russia’s Zvezda would be suspended and GTT's interventions would be limited, on the two most advanced LNG carriers, to ensuring the “safety of the projects” and the “integrity of the technology” in compliance with the international sanctions in force.

GBS projects

With regards to the GBS projects, the terms of GTT's departure are currently being finalised.

GTT added that these elements would have a financial impact mainly from 2023.

“GTT's order book will no longer include projects in Russia in the future. In addition, from 2023 onwards, the group's annual targets will exclude the revenues and EBITDA that would be generated by the last services in progress in Russia,” it added.

The company added that other shipping orders under construction in Asian shipyards, relating to six ice-breaking LNG carriers and two Floating storage units (FSUs), are intended specifically for Russian Arctic LNG projects.

“To date, these projects are proceeding normally. As of October 1, 2022, these orders represented a total revenue of €31M for GTT, to be recognised by 2024,” it said.

“Finally, eight conventional LNG carriers ordered by international shipowners, under construction in Asian shipyards, are also intended for Russian Arctic projects, but can operate in all types of conditions,” explained GTT.

“The group remains sensitive to the evolution of the situation and is taking all necessary measures to protect its employees and stakeholders, in compliance with international sanctions,” it concluded.

French major TotalEnergies reported a 43 percent increase in third-quarter net profits to $6.6 billion, driven by its liquefied natural gas business even with taking a $3Bln hit over Russian assets and temporary problems affecting supplies from liquefaction plants in Egypt, Nigeria, Australia and the US.

Australia LNG operator Santos with stakes in three Asia-Pacific liquefaction and export plants has issued a statement about speculation on the sale of shares in the company by ENN Group of China that had previously held a strategic stake and board representation.