The natural gas conflict between the United States and Russia is escalating

For the first time, the United States began directly targeting Russia’s ability to export liquefied natural gas. This move by Washington may cause turmoil in global energy markets.

Although European countries imposed major economic sanctions on Russia last year in the wake of the Russian-Ukrainian war, Moscow continued to import liquefied natural gas. Until recently, the United States refrained from increasing pressure on its European allies suffering from energy problems.

However, in early November, the US State Department announced that it would impose sanctions on a new Russian project known as “Arctic LNG 2.” According to officials, lawyers, and analysts, these sanctions will prevent European and Asian countries from purchasing gas from this project, which will begin production next year.

How will the market be affected?

Francis Bond, a sanctions expert at MacFarlanes law firm, said the United States is trying to “poison the entire project” by targeting the project’s operator.

The project is expected to begin shipping liquefied natural gas to the global market in the first quarter of 2024. Market analysts expected that congestion in Europe would be eased thanks to this project.

Anne-Sophie Corbeau, an energy expert at Columbia University, said that if Arctic 2 LNG does not start exporting as planned in 2024, “markets will remain tight for a longer period.” In addition, the announced sanctions will also harm Russia’s long-term goal of increasing LNG supplies and rival market leaders such as the United States and Qatar.

There were also Chinese, French and Japanese partners

The Arctic LNG 2 project is managed by private Russian company Novatek, which holds a 60% stake. Other shareholders include France’s TotalEnergies, two Chinese state companies and two Japanese companies.

On the other hand, the United States has not yet directly targeted Russia’s other major LNG projects, such as Yamal LNG and Sakhalin 2, which send fuel to Europe and Asia.

release date: 10:27, 12 November 2023