Japan's Mitsui to pull employees out of Russia's Arctic LNG 2 -Sankei (updated)

Samsung Heavy Industries

26/12/2023 09:11

* 
      Mitsui pulling out employees from ALNG2, retains stake -
media
    

        * 
      Samsung yet to start some blocks delivery for Russian
shipyard
    

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      Stakeholders suspended participation over U.S. sanctions -
media
    

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      China criticises sanctions
    

  
 (Combines Tuesday's stories on Arctic LNG 2, adds detail,
background)
    By Yuka Obayashi and Liz Lee
       TOKYO/BEIJING/SEOUL, Dec 26 (Reuters) - Japan's Mitsui
and Co  8031.T  has decided to pull its employees out of
Russia's Arctic LNG 2 liquefied natural gas (LNG) project, the
Sankei newspaper reported on Tuesday, citing several sources, in
yet another blow for the project. 
    At the same time, Mitsui's joint venture with Japan's JOGMEC
is expected to retain its stakes in the Arctic LNG 2, the report
said. Mitsui declined to comment, while JOGMEC was not
immediately available for comment.
    Arctic LNG 2, located on the Gydan peninsular north of the
Arctic circle, is a key element in Russia's strive to boost its
global share on the global liquefied natural gas market to  20%
by 2030 from 8% now.
    It's also a part of Russia and China's 'no limits'
partnership, developed as Moscow has been diverting its vast
energy resources from Europe to the commodity-hungry Asia amid
Western sanctions against the Kremlin over the conflict in
Ukraine.
    It has already faced difficulties due to U.S. sanctions and
a lack of gas carriers. 
    Fearing the backlash from the sanctions, foreign
shareholders suspended participation in the project, renouncing
their responsibilities for financing and for offtake contracts
for the plant, the daily Kommersant reported on Monday.
    China's state oil majors CNOOC Ltd  0883.HK  and China
National Petroleum Corp (CNPC) each have a 10% stake in the
project, which is controlled by Novatek  NVTK.MM , Russia's
largest LNG producer and owner of a 60% stake in the project.
    France's TotalEnergies  TTEF.PA  and a consortium of Japan's
Mitsui and Co  8031.T  and JOGMEC also have a 10% stake each.
    With three trains, Arctic LNG 2's capacity is meant to be
19.8 million metric tons per year and 1.6 million tons per year
of stable gas condensate. Its first LNG tankers were expected to
set sail in the first quarter of next year, according to
Novatek.
    But industry sources say that commercial LNG supplies from
the project are now expected no earlier than the second quarter
of 2024.
    Sanctions have also resulted in Novatek declaring force
majeure over LNG supplies from the project, industry sources
told Reuters last week.
    The European Union may also impose restrictions on Russia's
LNG supplies.
    A Beijing-based industry official with direct knowledge of
the matter told Reuters last week that CNPC and CNOOC have both
asked the U.S. government for exemptions from sanctions on
Arctic LNG 2. 
    On Tuesday, China unleashed its criticism against the U.S.'
sanctions over Arctic LNG 2.
    Economic cooperation between China and Russia was in the
mutual interest of both countries and "should not be interfered
with or restricted by any third party," Chinese foreign ministry
spokesperson Mao Ning said at a regular press conference.
    "China has always opposed unilateral sanctions and long-arm
jurisdiction without the basis of international law," she added.
    In another impediment for the project, South Korea's Samsung
Heavy Industries  010140.KS  said on Tuesday it has not started
making blocks and equipment for 10 out of 15 Arctic LNG carriers
contracted with Russian Zvezda shipyard. 
    It added that it still has been delivering blocks and
equipment for five of them to Zvezda.

 (Reporting by Yuka Obayashi and Kaori Kaneko in Tokyo, Liz Lee
and Andrew Hayley in Beijing, Joyce Lee in Seoul; Writing by
Vladimir Soldatkin; Editing by William Maclean)
 ((kaori.kaneko@thomsonreuters.com;))