India Rejects LNG from Sanctioned Russian Arctic Project

In a significant development, Pankaj Jain, India's Oil Secretary, has announced that the country will not procure liquefied natural gas (LNG) from Russia's Arctic LNG 2 project. This decision, made public on September 27, 2024, stems from the project's status under Western sanctions related to Russia's ongoing conflict in Ukraine, which began in February 2022.

Jain clarified India's stance, stating, > "We will not buy (supply from) Arctic LNG 2. We are not buying any sanctioned commodity. Something which has broad-based sanctions, we're not touching it."

This declaration aligns with India's broader policy of avoiding sanctioned goods, demonstrating the country's commitment to international regulations despite its growing energy needs.

The Arctic LNG 2 project, spearheaded by Novatek, Russia's largest independent natural gas producer, has faced numerous challenges due to these sanctions. Located on the Gydan Peninsula, the project aims to achieve a production capacity of 19.8 million tonnes per annum, utilizing advanced gravity-based structure (GBS) technology.

India's decision is particularly noteworthy given its position as the world's fourth-largest LNG importer. The country has been actively diversifying its energy sources to reduce dependence on Middle Eastern oil, making the rejection of Arctic LNG 2 supplies a significant move in its energy strategy.

The United States has imposed sanctions on numerous entities and individuals supporting Russia's war efforts, including those involved in the Arctic LNG 2 project's development and LNG shipment. These measures have affected the project's timeline, partnerships, and ability to secure necessary technology.

Arctic LNG 2, with Novatek holding a 60% stake, is a crucial component of Russia's strategy to increase its global LNG market share. The project, estimated to cost around $21.3 billion, is situated in the Utrenneye field, boasting reserves of approximately 1.98 trillion cubic meters of natural gas.

Environmental concerns have been raised regarding the project's potential impact on fragile Arctic ecosystems. However, proponents argue that LNG represents a cleaner alternative to coal for power generation, highlighting the complex balance between energy needs and environmental protection.

The global LNG market has experienced significant volatility due to geopolitical tensions and supply chain disruptions. India's decision to abstain from Arctic LNG 2 purchases reflects these broader market dynamics and the country's careful navigation of international relations.

Novatek has refuted allegations of involvement in establishing a "shadow fleet" for the Arctic LNG 2 project, emphasizing its commitment to transparent operations despite the challenging geopolitical environment.

As the situation evolves, India's stance on Arctic LNG 2 underscores the intricate interplay between energy security, geopolitics, and international sanctions in the global energy landscape.