US says business with Russia’s Arctic LNG 2 faces ‘significant sanctions risk'

The US government has issued fresh warnings that doing business with Russia's Arctic LNG 2 will face "significant sanctions risk," a State Department spokesperson told Platts, part of S&P Global Commodity Insights, following a series of LNG cargo discharges in China on sanctioned Russian ships called at Arctic LNG 2 facilities.

"Sanctions on Russia, including on Arctic LNG 2, remain in place. Those doing business with sanctioned entities such as Arctic LNG 2 face significant sanctions risk," the State Department spokesperson said Sept. 10, responding to questions about China's apparent increasing intake of Russia's Arctic LNG 2 cargoes at Beihai since the end of August.

"Further, any foreign financial institution processing transactions for an entity sanctioned under our Russia program can be sanctioned by the US government."

The State Department's comments came after a third sanctioned Russian LNG carrier departed the Tieshan terminal in the Port of Beihai, southern China, on Sept. 10, just days after the last ship left the terminal, according to S&P Global Commodities at Sea data.

As of 0831 GMT on Sept. 10, the Zarya -- formerly known as the North Way -- departed the Tieshan terminal with an indicated draft of 11.5 meters after arriving at 0630 GMT on Sept. 9, according to CAS data.

The indicated draft of the Zarya, which was sailing toward the east offshore south of Hainan island at 0534 GMT Sept. 11, has dropped to 9.3 m, according to the CAS data, which indicates that its cargo has been discharged.

The Zarya's departure follows that of the second sanctioned Russian LNG tanker, the Voskhod -- formerly called the North Mountain -- which left the Tieshan terminal on Sept. 7, having arrived a day earlier, CAS data showed. There were indications that its cargo had been discharged.

The indicated draft of the Voskhod -- seen near the Arctic LNG 2 facility on July 19 -- fell to 9.6 meters from 11.6 meters as of Sept. 5.

Both the Voskhod and the Zarya are under US and EU sanctions.

The Voskhod's departure follows that of the first sanctioned Russian LNG carrier, the Arctic Mulan, which arrived at the Tieshan terminal on Aug. 28 and departed on Aug. 29, according to CAS data. Shipping sources said the ship had discharged its cargo.

The State Department spokesperson added, "The US government has previously sanctioned China-based entities for transacting with, and providing support to, Arctic LNG 2."

Located in the Guangxi Zhuang Autonomous Region in southwestern China, the Beihai LNG terminal has a receiving capacity of 6 million metric tons per year.

It features a dedicated berth capable of accommodating LNG carriers ranging from 80,000 cum to 266,000 cu m, along with four LNG storage tanks, each with a capacity of 160,000 cum.

The terminal is currently operated by China's national energy infrastructure company, the National Oil and Gas Pipeline Network Group (PipeChina).

According to public business registration information, PipeChina is jointly owned by several state-owned enterprises and organizations, including PetroChina (29.9%), Sinopec (14%) and CNOOC (2.9%).

Other ships

Two other sanctioned Russian LNG carriers -- Buran and Iris -- are sailing west in the South China Sea and appear to be taking similar shipping routes with other sanctioned Russian ships called at the Tieshan terminal in the Port of Beihai, according to the CAS data.

The Buran -- formerly known as North Air -- was sailing west offshore south of Hainan island at 0522 GMT Sept. 11, CAS data showed. The Buran is laden with Arctic LNG 2 cargo, with half the cargo from the Murmansk transshipment terminal and the remaining half from the LNG facility, according to a source familiar with the matter.

It is followed by the Iris -- formerly called the North Sky -- which was sailing southwest toward south of Hainan island in the South China Sea, at 0338 GMT on Sept. 11, according to CAS data.

In June, following the commissioning of the second train, CAS data showed that loadings from the Arctic LNG 2 project had resumed, with the Iris arriving at the site on June 26.

Another sanctioned tanker -- La Perouse -- called at Arctic LNG 2 on Aug. 27, CAS data showed. It is the first of the recently loaded ships to have traveled west, rather than east, along the Northern Sea Route.

As of 0526 GMT on Sept. 11, La Perouse was heading south along Morocco.

La Perouse -- formerly called the SCF La Perouse -- was sanctioned by the UK in September 2024.

The North Sky and several other LNG ships linked to the Arctic LNG 2 project were sanctioned by the US in August 2024 as part of Washington's crackdown on Russian energy exports.

Novatek holds a 60% stake in Arctic LNG 2, alongside France's TotalEnergies, China's CNPC and CNOOC, and Japan Arctic LNG, all of which have 10% stakes.

Japan Arctic LNG BV is a Dutch corporation that is 75% owned by JOGMEC and 25% owned by Mitsui.