(Bloomberg) - The commencement of supply from Russia’s latest liquefied natural gas (LNG) venture will be postponed as the company has declared a force majeure on shipments due to US sanctions. This news has caused a surge in European gas prices.
According to sources who wish to remain anonymous due to the confidentiality of the matter, Novatek PJSC, the leading company behind the Arctic LNG 2 project, has sent force majeure notices to some of its buyers. The US sanctions imposed on the project in November have rendered it impossible to carry out shipments at the moment.
The delay in supply from the Arctic LNG 2 project is a significant setback for Russia, which is one of the world’s largest producers of natural gas. The project, located in the Arctic region, was expected to start production in 2023 and was set to become one of the country’s biggest LNG plants.
The force majeure declaration is a legal clause that allows a company to suspend or terminate its contractual obligations due to unforeseen circumstances beyond its control. In this case, the US sanctions have been deemed as a force majeure event by Novatek PJSC.
The US sanctions on the Arctic LNG 2 project were imposed as part of the country’s efforts to curb Russia’s influence in the global energy market. The project is a joint venture between Novatek PJSC and French energy giant Total SA, with the latter holding a 10% stake.
The delay in supply from the Arctic LNG 2 project has caused a ripple effect in the European gas market. The news has led to a surge in gas prices as the market braces for a potential shortage of supply.
In light of this development, it is crucial for Russia to find alternative buyers for its LNG. The country is already facing stiff competition from other major LNG producers such as the United States and Australia.
The delay in supply from the Arctic LNG 2 project also highlights the vulnerability of the global energy market to political tensions and sanctions. It serves as a reminder that energy security is a critical issue that needs to be addressed by all countries.
In conclusion, the force majeure declaration by Novatek PJSC on the Arctic LNG 2 project has caused a delay in supply and a surge in gas prices. This development highlights the impact of political tensions and sanctions on the global energy market and the need for energy security.
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