Sanctioned LNG ships gather off Russian coast as buyers withdraw, Bloomberg reports

Editor's note: The article was updated with comments from Vasily Astrov, an economist at the Vienna Institute for International Economic Studies (WIIW).

Tankers bearing sanctioned Russian liquefied natural gas (LNG) have clustered together off Russia's eastern coast, indicating that Moscow is struggling to sell the product amid Western restrictions, Bloomberg reported on Oct. 30.

Days before, commercial liquefication at Russia's Arctic LNG 2 came to a halt due to shipping difficulties imposed by Western sanctions.

Three of the tankers, now anchored near Russia, previously loaded cargo from the Arctic LNG 2 facility. The vessels — Nova Energy, Pioneer, and Asya Energy — are docked near the port of Nakhodka, according to ship-tracking data compiled by Bloomberg.

All three tankers have been sanctioned by the U.S. and the U.K.

Arctic LNG 2, owned by Russia's Novatek company, was envisaged as Russia's largest LNG plant and a flagship project that would help the country become the world's leading LNG producer. It aimed to produce almost 20 million metric tons of LNG per year.

Russia intended to sell Arctic LNG 2 products primarily to Asian markets, but companies from China and Japan suspended participation in the project last December due to international sanctions.

"The Arctic-2 plant was important for the Russian LNG industry - especially since gas exports via pipeline now suffer from the well-known infrastructural bottlenecks," says Vasily Astrov, an economist at the Vienna Institute for International Economic Studies (WIIW).

The government of India also announced in September 2024 that it would not buy LNG produced at the Arctic LNG 2 facility.

While the plant began shipping cargoes in August, Russia has reportedly not been able to find a buyer for its products.

The U.S. on Oct. 30 announced new sanctions on a company that transported equipment for the Arctic LNG 2 project and a network of shipping companies from the UAE and Singapore involved in the purchase of LNG transportation vessels for Novatek.

The latest round of restrictions came after the U.S. on Oct. 22 said it would "tighten the screws" on the export of Russian LNG, depriving Moscow of energy revenues that fund the full-scale war in Ukraine.

Despite the Arctic LNG 2 facility halting production, Astrov warns against overestimating the impact of Western sanctions.

"Although LNG production is a clear example of a sector where the impact of sanctions can be felt, this does not change the overall picture of the ineffectiveness of Western sanctions for the economy as a whole," the expert told the Kyiv Independent.

"It is growing, and the government will almost certainly have enough money in the budget to continue its war effort."

US imposes sanctions on nearly 400 individuals, legal entities, including Putin’s relative

The recent limitations are applied to companies involved in sanctions evasion networks in 17 jurisdictions, including China, India, Malaysia, the United Arab Emirates (UAE), Thailand, and Turkey, according to the U.S. Treasury Department.

The Kyiv IndependentKateryna Hodunova