Novatek Dismisses US Sanctions on Arctic LNG 2, Calls it a Bid to Inflate Gas Prices

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Russian gas giant Novatek has brushed aside recent US sanctions against its Arctic LNG 2 project, characterizing them as a maneuver to artificially boost global gas prices. The sanctions, imposed by Washington, are viewed by Novatek’s founder, Leonid Mikhelson, as an attempt to create an advantage for North American LNG players. This move follows heightened scrutiny of Novatek and its collaboration with French energy company TotalEnergies in the wake of Russia’s Ukraine invasion.

Key Points:

  1. Sanctions and the Arctic LNG 2 Project:
    • The $25-billion Arctic LNG 2 project, Russia’s second major liquefied natural gas (LNG) initiative, has faced fresh sanctions that prohibit related transactions without a special license from OFAC until January 31, 2024. The full extent of these sanctions is not entirely clear at present.
  2. Response from Novatek:
    • Leonid Mikhelson, founder of Novatek, viewed the US sanctions as a form of acknowledgment of their professionalism and alleged that they are aimed at benefiting North American LNG entities by driving up prices.
  3. Partnership with TotalEnergies:
    • The collaboration between Novatek and French company TotalEnergies has come under scrutiny due to Russia’s actions in Ukraine. TotalEnergies, which owns a 21.5% stake in Novatek, has been evaluating the potential impact of the sanctions on its contractual commitments to the Arctic LNG 2 project.
  4. Consequences and Uncertainties:
    • The sanctions have raised uncertainties regarding long-term supply contracts and the future financing of the Arctic LNG 2 venture. The project is significant for Russia’s LNG industry.
  5. Putin’s Presidential Bid:
    • Simultaneously, reports have confirmed that Vladimir Putin intends to officially run for president in the 2024 elections, marking his bid for a fifth term.

Novatek’s dismissal of the US sanctions as a ploy to manipulate gas prices underscores the geopolitical complexities surrounding energy markets. The fate of the Arctic LNG 2 project, as well as broader implications for Russia’s LNG sector, remains uncertain in light of these sanctions. Meanwhile, Putin’s political maneuvering adds another layer of significance to the developments in the Russian energy landscape.


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