Indo-Russian Relations
Daily coverage of what makes ties between Delhi & Moscow ever-lasting — even in times of western sanctions.

India Still Attracted to Russia's Arctic LNG 2 Project

Russia is looking to triple its liquefied natural gas (LNG) exports from 35 million tons annually at present to over 100 million tons by 2030. Arctic LNG 2, Russia’s third LNG export project, is set to commence operations this year.
Sputnik
Russia’s plans to secure around 20 percent of the global liquefied natural gas (LNG) market by mid-2030 aligns well with India’s quest for energy security to satiate the growing gas demand in the world’s fastest-growing major economy, Arpit Chandna, an energy specialist at Refinitiv, a London Stock Exchange Group (LSEG) company, told Sputnik India.

"Russia ambitiously plans to secure 20 percent of the global LNG market by 2030-2035, compared to around 8 percent at present, once the LNG Arctic projects being executed by Novatek PAO take off", Arpit said, citing the latest reports.

India has emerged as one of Russia's "strongest energy trading partners" in the wake of Western sanctions since February 2022, the energy specialist underscored, adding that he wouldn’t be surprised if liquefied LNG from Russia’s Arctic region also found its way to Indian terminals.
Meanwhile, Russia holds the world’s biggest natural gas reserves, according to Statista Platfom, with its status as an LNG powerhouse only set to be reinforced by vast gas deposits discovered in the Arctic region. Globally, Russia ranks as the second biggest LNG exporter behind the US, despite sanctions having stopped the country's piped gas exports to Europe.
One of Novatek's goals is to start exporting gas from Arctic LNG 2 and Yamal to Asian markets by the end of the year, in line with Russia’s increased economic focus on the Asia-Pacific.
Meantime, the Arctic LNG 2 project has also received investments from France's TotalEnergies, China National Offshore Oil Corporation (CNOOC), China National Petroleum Corporation (CNPC), and Japan Arctic LNG.
However, the US Treasury Department slapped sanctions against the developer of the LNG 2 project last November. This month, the US Office of Foreign Assets Control (OFAC) designated two tanker fleets linked to the project, Singapore's Red Box Energy Services and Hong Kong's CFU Shipping.

India should be able to "manage" the US Treasury Department sanctions on the LNG 2 gas field and other Arctic projects if it benefits the country, just as New Delhi has defied Western pressure amid the Ukraine conflict to procure Russia crude for the sake of nation's consumer interests, Arpit reckoned.

One of the advantages of sourcing natural gas from Russia could be that it will be delivered ex ship (DES), similar to Russian crude imports in India – that is, the supplier took care of freight, insurance, and other costs, he noted.

Meanwhile, last February, Indian company Deepak Fertilisers and Petrochemicals Corporation Limited (DFPCL) and Novatek signed an MoU for the supply of on-spot and long-term LNG to the company, including from the Arctic LNG 2 project.

Current Status of India-Russia LNG Cooperation

Hydrocarbon cooperation is one of the main pillars of the India-Russia special and privileged strategic partnership, according to bilateral documents.

However, the current LNG trade levels between the two countries are minimal.

"The only challenge facing the India-Russia LNG trade from taking off are supply side constraints on the Indian side, including developing more LNG terminals and a pan-country distribution infrastructure", Arpit explained.

He said that India’s proposed goal to increase the share of LNG in the country’s energy mix to 15 percent by 2030 from nearly six percent at present would require having more terminal capacity, currently at nearly 42 billion cubic metres.
At present, India’s LNG imports are routed through seven terminals – Dahej, Hazira, Dabhol, Kochi, Ennore, and Mundra – where liquefied gas is converted to gas before being transported.

"India currently has seven LNG terminals and with the plan of expanding the stake of LNG in the country's energy mix, the country would be looking to increase the import capacity which would need viable continuous supplies. India is clearly having a positive outlook for LNG imports supported by infrastructure developments such as Hindustan Petroleum Corporation Limited's (HPCL) Chhara and Gas Authority of India Limited's (GAIL) Ratnagiri breakwater facility", Arpit said.

He also noted that Indian Oil Corporation’s (IOC) was looking to operationalise its Ennore-Tuticorin pipeline, as well as plans to commission the Northeast Gas Grid Plan by 2025, stating that these projects would boost "domestic re-gasification capabilities".
A five-year roadmap (2019-2024) to bolster imports of Russian LNG as well as two-way investments in the sector was signed by Indian Prime Minister Narendra Modi and Russian President Vladimir Putin in 2019. They welcomed Novatek enhancing LNG supplies to India as well as jointly enhancing the gas distribution market with infrastructure development.
Notably, the first major India-Russia LNG deal was signed by the Gas Authority of India Limited (GAIL) and Gazprom in 2012. Under the long-term 20-year contract, India received its first LNG delivery from Russia in 2018 through the Northern Sea Route (NSR), according to reports.
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