popular articles

Russia: a dark LNG fleet to circumvent Western sanctions

Russia could develop a "dark LNG fleet" to transport natural gas in the face of Western sanctions, according to Flex LNG.
Flotte Sombre GNL Russie

Please share:

Russia could use a fleet of LNG ships to circumvent Western sanctions, inspired by its own methods for transporting crude oil and petroleum products. Flex LNG pointed out that current sanctions on Russian LNG transport are limited, but that the US and UK have sanctioned Novatek’s Arctic LNG 2 project, with a planned production capacity of 19.8 million tons per year. The EU (European Union) is considering similar measures to restrict re-exports of Russian LNG from its ports. Developers of the Arctic LNG 2 project initially planned to build around 21 Arc7 ice-breaking LNG carriers to operate in icy conditions. However, the construction of these vessels has been hampered by sanctions, delaying the start of LNG production planned in phases between 2023 and 2026. Flex LNG suggests that Novatek could use existing vessels to meet export needs.

Demand for LNG ships

Currently, around 15 ice-breaking LNG vessels are serving Novatek’s Yamal LNG project. One potential scenario is that these vessels also carry Arctic LNG 2 cargoes to non-ice-covered waters for transshipment to conventional vessels. This would increase demand for LNG carriers, especially if the sanctions proposed by the EU are approved. Transactions on the second-hand market for old ships with opaque companies have intensified. Flex CEO Oystein Kalleklev said:

“This could potentially be the beginning of our dark LNG fleet…. They’ll have to do more ship-to-ship transfers.”

Little-known companies based in Vietnam, China and the United Arab Emirates have recently purchased older vessels, some at high prices.

Consequences of sanctions and dark fleet activity

Second-hand sales have multiplied as Russia has accumulated a large number of tankers via shell companies or in coordination with opaque companies since its invasion of Ukraine in February 2022. This strategy is designed to circumvent the Western oil embargo and the G7 price cap. A joint study by S&P Global Commodity Insights and S&P Global Market Intelligence revealed that 591 tankers had violated or were at risk of violating the sanctions, representing just over 10% of the world’s commercial fleet. Oystein Kalleklev warned that Russia plans to replicate this strategy for LNG. This warning comes as the EU discusses its 14th package of sanctions against Moscow, which could include measures to restrict re-exports of Russian LNG from EU ports.

Impact on markets and logistics

EU purchases of Russian gas and LNG have fallen from 155 billion cubic meters in 2021 to 80 billion in 2022, and just 43 billion last year. Although there is no EU-wide ban on Russian imports for the time being, member states will be able to decide individually to limit import levels.
Even if the EU drastically reduces its purchases of Russian LNG, cargoes will flow to willing buyers in Brazil, India, China and South Africa, resulting in longer shipping distances. This could increase ton-mile demand. Platts valued the rental rate for a Tri-Fuel Diesel Electric LNG carrier in the Atlantic at $36,500/day, and the rates for two-stroke carriers at $47,500/day on May 23.

Register free of charge for uninterrupted access.

Publicite

Recently published in

Following the halt of gas deliveries through Ukraine, Slovakia now relies on the TurkStream pipeline and a route through Hungary to secure its supply. This decision aligns with its independent energy strategy despite geopolitical tensions in Europe.
ADNOC Gas reports a net profit of $5 billion in 2024, marking a 13% year-on-year growth. The company strengthens its position with adjusted revenues of $24.43 billion and plans strategic investments through 2029. ##
ADNOC Gas reports a net profit of $5 billion in 2024, marking a 13% year-on-year growth. The company strengthens its position with adjusted revenues of $24.43 billion and plans strategic investments through 2029. ##
McDermott has successfully completed the transportation, installation, and commissioning of the Kikeh subsea gas lift project, awarded by PTTEP Sabah Oil Limited. Conducted in deep waters off the coast of Sabah, East Malaysia, the project was completed in under eight months.
McDermott has successfully completed the transportation, installation, and commissioning of the Kikeh subsea gas lift project, awarded by PTTEP Sabah Oil Limited. Conducted in deep waters off the coast of Sabah, East Malaysia, the project was completed in under eight months.
Facing declining interest from European companies in its gas storage capacity, state-owned operator UkrTransGaz is focusing on integrating into the European Union market and implementing measures to strengthen the competitiveness of its infrastructure despite security challenges.
Facing declining interest from European companies in its gas storage capacity, state-owned operator UkrTransGaz is focusing on integrating into the European Union market and implementing measures to strengthen the competitiveness of its infrastructure despite security challenges.
ONEOK and MPLX announce a collaboration to build an LPG export terminal on the U.S. Gulf Coast, strengthening their presence in the NGL sector.
Baker Hughes has secured an order from Tecnicas Reunidas for six gas compression trains and six propane compressors, key elements in the third expansion phase of the Jafurah field in Saudi Arabia.
Baker Hughes has secured an order from Tecnicas Reunidas for six gas compression trains and six propane compressors, key elements in the third expansion phase of the Jafurah field in Saudi Arabia.
Moldova begins routing gas to Transnistria with the help of €30 million from the EU, ensuring supply until February 10 despite the energy crisis.
Moldova begins routing gas to Transnistria with the help of €30 million from the EU, ensuring supply until February 10 despite the energy crisis.
A Scottish court has overturned the licenses granted by British authorities to Shell and Equinor to develop two oil and gas fields in the North Sea, prompting a delay in their exploitation and requiring new environmental assessments.
A Scottish court has overturned the licenses granted by British authorities to Shell and Equinor to develop two oil and gas fields in the North Sea, prompting a delay in their exploitation and requiring new environmental assessments.
Baker Hughes has signed a major contract to supply modular LNG systems and a power island, while also entering into a multi-year service agreement to support phases 1 and 2 of the Plaquemines LNG project in Louisiana.
GRTgaz renames itself NaTran to highlight its commitment to transforming its gas networks, aiming to become a key player in the transport of decarbonized gas by 2030. This change in identity accompanies an ambitious project to address energy and climate challenges.
GRTgaz renames itself NaTran to highlight its commitment to transforming its gas networks, aiming to become a key player in the transport of decarbonized gas by 2030. This change in identity accompanies an ambitious project to address energy and climate challenges.
The separatist authorities of Transnistria accuse Chisinau of diverting the European aid of 30 million euros intended for gas purchases. Disagreements persist over the distribution of resources amid the ongoing energy crisis following the halt of Russian deliveries.
The separatist authorities of Transnistria accuse Chisinau of diverting the European aid of 30 million euros intended for gas purchases. Disagreements persist over the distribution of resources amid the ongoing energy crisis following the halt of Russian deliveries.
Saneg, in partnership with international players, transforms flared gas into a usable resource, reducing energy dependency while strengthening its position in a pressured energy market.
Saneg, in partnership with international players, transforms flared gas into a usable resource, reducing energy dependency while strengthening its position in a pressured energy market.
Morocco is investing in a 990 MW gas power plant, backed by local and international financing, to achieve strategic and economic objectives.
The Investment Promotion Agency (APIX) and the Senegalese Gas Network (RGS SA) are formalizing a key partnership to develop a gas pipeline network, a crucial step to support the exploitation of the country's natural gas reserves.
The Investment Promotion Agency (APIX) and the Senegalese Gas Network (RGS SA) are formalizing a key partnership to develop a gas pipeline network, a crucial step to support the exploitation of the country's natural gas reserves.
Shell has completed the acquisition of RISEC Holdings, consolidating its presence in the ISO New England market with a 609 MW combined-cycle power plant.
Shell has completed the acquisition of RISEC Holdings, consolidating its presence in the ISO New England market with a 609 MW combined-cycle power plant.
ExxonMobil and Qatar Energy begin a strategic drilling operation off the coast of Cyprus, targeting new natural gas deposits. This initiative reflects the European Union's quest to diversify its energy supply sources.
ExxonMobil and Qatar Energy begin a strategic drilling operation off the coast of Cyprus, targeting new natural gas deposits. This initiative reflects the European Union's quest to diversify its energy supply sources.
Global natural gas markets will remain tight in 2025, with rising demand meeting slower supply growth. Geopolitical tensions could further exacerbate these market pressures.
European gas reserves have dropped by more than 17% in one year, while the Title Transfer Facility (TTF) futures contract exceeds 50 euros/MWh. The European Union raises its storage targets to secure winter supply.
European gas reserves have dropped by more than 17% in one year, while the Title Transfer Facility (TTF) futures contract exceeds 50 euros/MWh. The European Union raises its storage targets to secure winter supply.
Algeria partners with Chevron to evaluate hydrocarbon resources in its Mediterranean waters. This collaboration could reshape the country’s energy strategy and attract significant international investments.
Algeria partners with Chevron to evaluate hydrocarbon resources in its Mediterranean waters. This collaboration could reshape the country’s energy strategy and attract significant international investments.
The American giant Chevron joins Greece's natural gas exploration sector, targeting resource-rich zones. This strategic initiative aligns with the expansion of hydrocarbon operations and strengthens Europe's energy independence.
The American giant Chevron joins Greece's natural gas exploration sector, targeting resource-rich zones. This strategic initiative aligns with the expansion of hydrocarbon operations and strengthens Europe's energy independence.
The Transdniestria region of Moldova faces a major energy crisis following Gazprom's suspension of gas deliveries. This situation highlights the economic and geopolitical tensions in the region.
In Moldova, the end of Russian gas deliveries has plunged several villages under Moldovan control in Transnistria into a severe energy crisis, highlighting the logistical and economic challenges of an independent energy supply.
In Moldova, the end of Russian gas deliveries has plunged several villages under Moldovan control in Transnistria into a severe energy crisis, highlighting the logistical and economic challenges of an independent energy supply.
A private company partners with Pine Cliff Energy to secure natural gas supply for an off-grid data center in Alberta under a 25-year contract based on NYMEX market prices.
A private company partners with Pine Cliff Energy to secure natural gas supply for an off-grid data center in Alberta under a 25-year contract based on NYMEX market prices.
CNOOC Limited has announced the start of production at the Dongfang 29-1 gas project, located in the Yinggehai Basin, marking a major milestone for sustainable energy supply around Hainan Island.
CNOOC Limited has announced the start of production at the Dongfang 29-1 gas project, located in the Yinggehai Basin, marking a major milestone for sustainable energy supply around Hainan Island.

Advertising