In July, about a week after NATO leaders pledged more military support for Ukraine at their summit in Lithuania, a smiling Russian President Vladimir Putin watched the world’s largest floating structure set off from a construction site in Murmansk, a Russian city on the Barents Sea. The 640,000 ton platform was destined for the Gydan Peninsula in Siberia, where it would link up with infrastructure on land to begin cooling vast quantities of gas into shippable liquid form—eventually producing more than 6 million metric tons of liquified natural gas (LNG) per year from 2024.
The platform—which housed the first so-called train, or production line, of a massive gas extraction and liquefaction project known as Arctic LNG 2—relied heavily on international investment and Western technology. France-based TotalEnergies proudly announced a total 21.6 percent interest in the project when it launched in 2019, alongside investors from China and Japan. (TotalEnergies has since announced that it will no longer provide capital to the project.) The remoteness of the Gydan Peninsula and the freezing Arctic winters mean that Arctic LNG-2 required the world’s best engineers and leading technology to get the gas out of the ground, liquified, and onto tankers. The turbines are state-of-the-art, provided by U.S. engineering firm Baker Hughes. German-founded Linde supplied the heat exchangers needed to cool the gas. The United Kingdom’s Hill & Smith provided cryogenic pipe supports. And Italy’s Saipem played a crucial coordinating role and supplied electrical cables.
In April, the European Union announced a ban on the export of LNG equipment to Russia. Yet despite this, the shipment of the first part of the project was on time—a point that Putin made sure to cover in his televised remarks from Murmansk.
Over the past nine months, members of the Anti-Corruption Data Collective have been poring over customs data and satellite imagery to provide journalists at multiple European media outlets—including this week in Der Spiegel in Germany, Der Standard in Austria, Le Monde in France, Italy’s Il Fatto Quotidiano, and The Times of London—with intelligence on the involvement of Western companies in the project.
These investigations have revealed how Arctic LNG 2 was enabled by constant deliveries of vital equipment from European and U.S. manufacturers throughout the war in Ukraine. These shipments continued to be made after the EU announced its ban on the export of LNG industry hardware to Russia, and right up until the deadline for sanctions coming into force.
According to Russian customs records, since the full-scale invasion of Ukraine began in February 2022, the main Russian trading company for Arctic LNG 2 has imported more than $400-million worth of equipment that originated in Europe.
In September, the U.S. State Department placed sanctions on dozens of Russian companies involved in building energy infrastructure projects such as Arctic LNG 2. Targeted companies included a subsidiary of Novatek, Russia’s largest private gas concern, that constructed two massive LNG storage tanks that the company intends to use to transfer LNG from the Arctic. The State Department also decided to sanction an Abu Dhabi-based firm that was recently established to provide “engineering services and technology” that were “previously provided by European service companies.”
The EU has so far chosen not to sanction Russian LNG directly, nor Novatek or its founder and CEO, the oligarch Leonid Mikhelson. With piped oil and gas and maritime shipments of crude from Russia almost completely stopped, Russian LNG has been in high demand. In 2022, EU countries received 90 percent of the output from Novatek’s Yamal LNG project, located just 70 kilometers (about 43 miles) from Arctic LNG 2. Shipments from Yamal to Europe are projected to continue increasing in 2023, according to analysis by High North News.
Europe should be under no illusions about the price of its addiction to Russian gas. The first-ever stakeholder mapping of the Russian Arctic by Arctida, a nonprofit watchdog founded by exiled Russian anti-corruption advocates, demonstrates that businesses, political leadership, security agencies, and expert groups in the region are often closely entwined, and follow an agenda set by the Kremlin. Close Putin associate Gennady Timchenko sat on Novatek’s board of directors until the EU and U.K. added him to their sanctions lists in March 2022, following similar sanctions imposed by the United States in 2014.
Since the invasion of Ukraine, Russia has looked increasingly to Asia as a market for its gas exports. Arctic LNG 2 puts within reach something Putin has long dreamed of—year-round shipments of gas via the Northern Sea Route from the Barents Sea to the Bering Strait. Compared to the Suez Canal, the Northern Sea Route cuts the journey time almost in half, and more importantly for Putin, keeps traffic flowing within Russia’s exclusive economic zone.
And Arctic LNG 2 won’t just increase the number of tankers navigating the route—it will also construct transhipment hubs at each end, which will let conventional tankers pick up gas delivered there. Global warming plays a part, too, by reducing the amount of time the route is ice-bound each year.
The Kremlin wants Russia to export 100 million metric tons of LNG by 2030. The invasion of Ukraine and the emergence of the United States as a major LNG exporter have made this target much harder to reach. But Arctic LNG 2 moves the needle closer. As soon as 2024, it is expected to generate revenue for Putin and his cronies, helping Russia wage war against its neighbors, interfere in democracies, and expand its influence around the world. Arctic LNG 2 is also on the list of so-called “carbon bombs”—projects that will emit more than 1 billion metric tons of carbon dioxide over their lifetimes.
Had EU sanctions on LNG technology come into force sooner, or had Western companies been forced to abandon their contracts immediately, it is unthinkable that the first part of Russia’s project would be about to come online. Replacement technologies from Turkey or China for the remaining production lines will be expensive and time-consuming to incorporate, but a working first train helps balance those costs.
Mikhelson recently signaled that he has even bigger plans: Gas previously piped to Europe will be cooled and shipped from a new plant in Murmansk once the next part of Arctic LNG-2 is complete, he said.
This makes it all the more urgent that the EU target Russia’s strategic energy projects in its next round of sanctions. The EU should follow Washington’s lead by designating entities directly responsible for building and operating Arctic LNG 2 and other gas projects. Europe can and should also go further by broadening the list of items banned for export to Russia. This will help stop the development of new upstream gas projects and hinder Putin’s ability to build infrastructure along the Northern Sea Route. At a minimum, EU member states should ban the transshipment and reexport of Russian LNG in their ports.
Critically, as the United States prepares to host the Conference of the States Parties to the U.N. Convention Against Corruption in December, the West must continue to strengthen the global anti-money laundering regime, both on paper and in practice.
Journalists’ investigations into the supply of equipment and services to Arctic LNG 2 often hit dead ends, as many engineering contracts shifted to companies set up in opaque jurisdictions after the EU introduced sanctions against Russia. The same opacity in company ownership that allows criminals to move and launder their illicit funds also facilitates sanctions-dodging by businesses determined to continue trading with Russia. For Washington, that effort should start with setting the example at home, with the full and effective implementation of the Corporate Transparency Act.
And to get to the root of the problem, the West must accelerate its transition to renewable sources of energy and help others do the same. Western companies have helped Putin to build a carbon bomb, but there is still time to defuse it.
