U.S. Sanctions Impede Russia’s Arctic LNG Ambitions

In a setback to Russia’s Arctic ambitions, the Chinese vessel Wei Xiao Tian Shi reversed course on Monday, opting not to deliver liquefied natural gas (LNG) modules to the sanctioned Arctic LNG 2 project. This development, coupled with the reported disruption in planning for Russia’s Murmansk LNG project, underscores the impact of U.S. sanctions on Russia’s energy infrastructure.

After a three-month journey carrying two massive 14,000-ton modules used to support heavy pipes in industrial infrastructure projects, the Wei Xiao Tian Shi turned back just days before reaching Russian waters. This decision appears to have been the direct result of U.S. sanctions imposed just prior to the Wei Xiao Tian Shi’s departure from China, targeting Chinese construction yards and vessel operators involved in Russian energy projects. The sanctions previously targeted entities, such as Hong Kong-based CFU Shipping, Singapore-based Red Box, and their associated vessels, significantly hindering the Arctic LNG 2 project.

Without the two modules aboard the Wei Xiao Tian Shi, the Arctic LNG 2 project, led by Novatek, Russia’s largest natural gas producer, faces potential delays or disruptions. This will limit Russia’s LNG output and block the pursuit of broader economic objectives such as increasing shipping along the country’s Northern Sea Route and shifting natural gas exports from Europe to Asia.

The decision not to deliver the two modules signals a shift in Chinese corporate behavior toward compliance with U.S. sanctions. While it is unclear whether the decision was made by Hainan Smiling Angel Shipping (which owns the Wei Xiao Tian Shi), Wison New Energies (responsible for assembling the modules), or both, it reflects growing caution among Chinese companies regarding U.S. sanctions. Notably, Wison New Energies had already ceased operations with Russia and announced plans to sell its construction yard in Zhoushan, China, where Novatek modules had been worked on.

Sanctions also appear to have disrupted planning for Novatek’s Murmansk LNG project, which was expected to produce 20 million tons annually. While Novatek may be able to locally manufacture the modules that would have otherwise been produced by Wison New Energies, installation of the yet-to-be-built modules could be delayed for years — if not indefinitely.

To build on this progress, the U.S. government should sustain its rigorous enforcement of existing sanctions, particularly those targeting Russia’s energy infrastructure development. Additionally, enhanced diplomatic engagement with international partners, especially in Asia, can ensure broader compliance with the sanctions regime. The United States should also work with allied Arctic powers, including Canada and Finland to consider expanding sanctions to cover a wider range of technologies and services critical to Arctic energy development. Additionally, increasing resources for the Treasury Department’s Office of Foreign Assets Control, which administers U.S. sanctions, would improve its capacity for identifying targets and enforcing sanctions effectively.

Max Meizlish is a senior research analyst for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from Max and CEFP, please subscribe HERE. Follow Max on X @maxmeizlish. Follow FDD on X @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.