U.S. sanctions on COSCO hit LNG tankers in Russia's Arctic (updated)

Dynagas LNG Partners LP

30/09/2019 11:26

* Sanctions extend to Teekay LNG shipping venture
    * Teekay's specialist tankers ship LNG from Russian Arctic
    * Novatek's Yamal LNG output exceeding expected capacity

 (Adds detail, Teekay quote, graphic)
    By Sabina Zawadzki
    LONDON, Sept 30 (Reuters) - U.S. sanctions on two units of
Chinese shipper COSCO hit the liquefied natural gas (LNG) tanker
industry on Monday as U.S.-listed Teekay LNG  TGP.N  said its
shipping joint venture in Russia had been "blocked" because of
its ties to COSCO.
    The United States imposed sanctions on COSCO Shipping Tanker
(Dalian) Co and subsidiary COSCO Shipping Tanker (Dalian) Seaman
& Ship Management Co for allegedly carrying Iranian crude oil.
 urn:newsml:reuters.com:*:nL3N26I1SU
    Teekay LNG said on Monday that its 50-50 Yamal LNG Joint
Venture had been deemed a "blocked person" under the sanctions
because its partner China LNG Shipping (Holding) (CLNG) is 50%
owned by COSCO Dalian.
    "As a result of CLNG's 50% interest, the Yamal LNG Joint
Venture also currently qualifies as a 'Blocked Person' under
OFAC rules," Teekay said in a statement, referring to the
Executive Office of Foreign Assets Control (OFAC) Order.
    "For clarity, the Teekay Group has not traded and will not
trade with Iran and will not act in contravention of any trading
sanctions," Teekay said in the statement after postponing its
Oct. 2 investor day because of the developments.
    The venture owns Arc7-class LNG tankers capable of
navigating through Arctic ice, making them key to transporting
LNG from Novatek's  NVTK.MM  Yamal LNG plant in northern Russia.
    The LNG plant, surrounded by thick ice during the winter, is
unique in operating in such harsh conditions. The Arc7 tankers
take LNG westward to Europe in winter and eastward to Asia in
summer when ice along the Northern Sea Route dissipates
sufficiently to allow passage.
    A Novatek spokeswoman declined to comment immediately.
    Teekay said it would hold a conference call at 2000 GMT to
discuss the developments.
    
    SIZEABLE FLEET
    The venture owns the Eduard Toll, Rudolf Samoylovich,
Nikolay Yevgenov and Vladimir Voronin tankers, all newly built
for Yamal, which began operations in December 2017.
    Georgiy Ushakov, another Teekay Arc7 tanker, is now heading
to Yamal after its sea trials around South Korea's Daewoo
Shipbuilding and Marine Engineering (DSME)  042660.KS  shipyard.
A sixth, Yakov Gakkel, is undergoing tests.
    A further nine Arc7 tankers serving the Yamal plant are
managed by Dynagas  DLNG.N , Mitsui OSK Lines  9104.T  and
Sovcomflot.
    Yamal has been producing and shipping LNG above its expected
capacity of 16.5 million tonnes a year (mtpa), shipping 12.8
mtpa so far this year.
    "Everything is going without hindrance," a source close to
Novatek told Reuters when asked about the tankers' movements.   
    The sanctions imposed last Friday on the two COSCO units
caused oil freight rates to spike as Asian oil buyers rushed to
secure alternative vessels to load crude oil from the Middle
East.
    Shipping analysts said LNG freight rates have jumped by
between 7% and 11% in the past week to about $70,000 a day,
though rates have been rising gradually in recent weeks as
winter demand picks up.
    

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 (Additional reporting by Ekaterina Kravtsova in London and
Vladimir Soldatkin in Moscow
Editing by Jason Neely and David Goodman)
 ((sabina.zawadzki@thomsonreuters.com; +44 207 542 4051))