How Western Sanctions Are Strangling Putin’s Arctic Gas Ambitions

-- Russia ’s fortress economy has proved remarkably resilient to an onslaught of Western sanctions. Two years after the Kremlin’s invasion of Ukraine, it continues to fund a costly war and to prop up President Vladimir Putin .Trump Aide Hicks Cries on Witness Stand, Recalls 2016 ChaosThe Novatek PJSC-led Arctic LNG 2 facility, on the icy Kara Sea, is a key part of Moscow’s plans to boost exports and replenish coffers.

“US sanctions are working surprisingly well,” said Malte Humpert, founder of the Arctic Institute, who has been monitoring Russia’s expansion in the region for over a decade. “Here, they’re really ahead of the curve. They blocked Arctic LNG 2 before it even started production, blocked the vessels before they could be delivered. With everything else, like oil or the shadow fleet, it’s always reactive.

The White House’s National Security Council began turning its attention to crippling Russia’s LNG expansion plans in 2023, about a year into the war, according to people with knowledge of the strategy. Officials there teamed up with the US State Department and Department of Defense to pick a target, eventually homing in on the Arctic LNG 2 project. They then brought it to the Treasury.

Then there’s the fact that Arctic LNG 2 requires a unique type of ship that can glide through thick ice. There were 21 ice-class tankers ordered for the operation, including vessels owned by South Korea’s Hanwha Ocean Co. and Mitsui OSK. These are now struggling to find new owners. Of course, Russia can bring in its own capacity and LNG carriers are being built at the Zvezda shipyard — but even those have been delayed by sanctions.

Yet even the government is beginning to recognize the scale of the challenge as sanctions accumulate and technology proves slow to replicate. Figures in an Economy Ministry document published earlier this year and seen by Bloomberg suggest that production could in fact stagnate through 2027 under a conservative scenario, levels that would imply Arctic LNG 2 may not rapidly ramp up.

But now he needs to contend with the potential departure of more foreign partners as constraints tighten — and to find customers. Rep. Marjorie Taylor Greene took a shot at Fox News after a columnist for the outlet called her “an idiot” who is trying to “wreck the GOP.” “Fox News called me an idiot. That was literally their headline. They called me an idiot,” Greene said during an appearance on Steve Bannon’s podcast this week.

Source: Financial Digest (financialdigest.net)

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