Russian energy company Novatek could have access to three of its planned ice-breaking Arc7 LNG carriers by this winter for its just started-up Arctic LNG 2 project, data provider Kpler said.
In a webinar market analyst for LNG & natural gas Ana Subasic said the Kpler’s base case assumes that there will be three Arc7s available by the end of the winter with LNG exports from the new Russian project reaching up to 1.2 million tonnes in 2024.
Subasic said Arctic LNG 2, which has been sanctioned by the US, can load up to a maximum of four cargoes per month up to November based on what Kpler knows of its production rates.
But she said that as the Northern Sea Route closes for winter the project would need to rely on Arc7s LNG carriers for its exports.
Subasic listed eight Arc7s as possible ships for the project.
These included the six LNG carriers under construction at Hanwha Ocean in South Korea and two vessels at the Zvezda Shipbuilding Complex in Russia.
“Kpler Insight anticipates that there will be new efforts to transfer these three Hanwha Ocean vessels to foreign entities,” Subasic said.
Other industry observers said they were less convinced on this pointing to the shipbuilder and its parent group’s strong US connections and ongoing arbitration over the vessels.
Subasic also highlighted one of the Arc7s being built by Mitsui OSK Lines in South Korea — the 172,600-cbm Ilya Mechnikov — which she said had undergone gas and sea trials.
She said the first two Zvevda newbuildings — the 172,600-cbm Pyotr Stolpin and the Ilya Mechnikov — are due to be in service by the end of this year but this is contingent on the re-engineering of parts for the vessels, following the withdrawal of foreign contractors from their construction.
Subasic also speculated about the two cargoes already loaded from Arctic LNG 2 with colleague Kpler director of data science, commodities and maritime Petar Todorov explaining how these have been tracked while spoofing their positions.
She said Novatek is expected to sell these cargoes on a spot basis and at a discount making them particularly attractive to buyers with limited resources.
The analyst said their destinations are unclear but added that the vessels are expected to head to emerging markets in Asia and to players who do not have existing associations or offtake agreements with US suppliers.
She highlighted that Novatek set up a marketing office in China this year.
Subasic said Turkey or Egypt could also be options but as these receiving terminals are operated by state-owned entities or private companies these would not want to take any risks with sanctioned entities.
She said Kpler’s base case scenario is that production from Arctic LNG 2 could reach up to 4.8 mt in 2025 and two more Arc7s could be delivered to the project fleet from the Zvezda Shipbuilding Complex bringing the total to six next year.
Subasic said the project’s Train 2 is due online early in the third quarter of 2025 which would double the plant’s capacity to 13.2 million tonnes per annum and Kpler assumes it will operate at full capacity.
In 2025 Kpler expects an average of around nine cargoes per month from the project during the period in which the NSR is open after which export shipments will decline to five to six per month as winter conditions set in and access to the specialised ice-breaking fleet will remain limited.
The data provider believes Arctic LNG 2’s third liquefaction train is “suspended indefinitely” after its modules were recalled before they reached their final destinations.
