US sanctions halt delivery of new vessels to Russian LNG plant

The delivery of specialized ships to a new Russian liquefied natural gas facility is being upended by US sanctions, according to Mitsui OSK Lines Ltd., threatening exports.

The Japanese shipping line can no longer charter the three ice-breaker LNG ships to the Arctic LNG 2 project due to US restrictions, and efforts to sell them could be challenging, President Takeshi Hashimoto said in an interview.

The start of the plant, a key venture for Russia, has been hit by US measures as Washington penalizes Moscow for the war in Ukraine. Operator Novatek PJSC had planned to use the vessels to pick up fuel from the site, and without them, it will be challenging to operate at the intended capacity. Novatek has already delayed the facility’s maiden voyage, and is struggling to find buyers.

“Our contractual obligation is that if we cannot provide the service to Arctic 2, we have to sell our vessel to Arctic 2,” Hashimoto said in an interview in Goa, India, on Tuesday. However, “there is a sanction that says we should not do that deal with Arctic. So it’s a bit complicated.”

MOL, as the firm is known, is working with the US and Japanese governments to find a solution, Hashimoto said. The first of the three ice-breaker LNG vessels will finish construction later this year.

Meanwhile, overseas partners in Arctic LNG 2, including Japan’s Mitsui & Co. and France’s TotalEnergies SE, have declared force majeure on their participation.