U.S. Targets Russia’s Arctic Shipping Capacity in Latest Round of Sanctions

By Malte Humpert (gCaptain) –

In an effort to further disrupt Russia’s ability to develop Arctic gas and oil projects the U.S. State Department announced sanctions against four shipping operators of heavy lift vessels and cargo ships.

The vessels in question provide transport services for the construction of Novatek’s Arctic LNG 2 and Rosneft’s Vostok Oil projects. 

The U.S. first sanctioned Arctic LNG 2, a 20 mta LNG project in the Russian Arctic, in November 2023. Those measures have thus far prevented Novatek from beginning production and exports from the plant. 

“Today’s actions demonstrate the United States’ continued resolve to constrain the Arctic LNG 2 project’s production and export capacity and limit third-party support to the project,” the State Department’s announcement explains. U.S. officials have on multiple occasions announced their intention to “kill the project.”

The latest sanctions target Singapore-based company Red Box and its two vessels Pugnax and Audax. 

The ice-capable heavy lift vessels have carried numerous prefabricated LNG modules for Novatek’s Arctic LNG 2 project as recently as February of this year. 

At the time Red Box’s CEO Philip Adkins insisted that his company was merely carrying “steel structures” and was not carrying sanctioned technology from China to Russia. He compared his company’s service to that of Uber, an independent contractor who had no business relationship with sanctioned parties. 

The State Department announcement, however, details that Red Box “loaded LNG modules for Arctic LNG 2, conducted port calls, and discharged cargo at the Belokamenka LNG Construction Center” itself a sanctioned entity.

It furthermore highlights that “the most recent delivery of LNG modules for the Arctic LNG 2 project by vessels operated by Red Box occurred in late February 2024,” after the designation of Arctic LNG 2 and Belokamenka as sanctioned entities.

Red Box’s polar-class vessels have proven instrumental in delivering modules year-round along the ice-covered waters of Russia’s Northern Sea Route. Audax and Pugnax delivered seven out of 26 modules for Arctic LNG 2, with additional units carried for the predecessor project Yamal LNG. 

A second operator of heavy lift vessels, Hong Kong-based company CFU Shipping, was also sanctioned. Its vessel Hunter Star also delivered a module containing sanctioned technology last month.

“Hunter Star […] delivered the final LNG module for the second production train of the Arctic LNG 2 project,” the announcement details.

The latest U.S. measures also target a dozen general cargo and container vessels by Russian operators Eko Shipping and Transstroy. 

The vessels, many of which possess ice-class ratings allowing for year-round deliveries to Arctic construction sites, have delivered hundreds of thousands of tons of materials and equipment to both Arctic LNG 2 and the upcoming Vostok Oil project. 

The vessels in question are Arctica 2, Bering, Mys Flora, Mys Dezhneva, Barents, Andrey Osipov, Mikhail Britnev, Mys Shmidta, Mangazeya as well as Arctica 1, Mys Zhelaniya, Vasily Lanovoy. 

Rosneft intends to begin production at Vostok Oil, the largest oil project in Russia in four decades, this year. 

By the end of the decade the company intends to ship 100 million tons per year across the Arctic, though it remains to be seen if it can secure the required fleet of ice-capable ships. The U.S. has targeted Russia’s Zvezda shipyard where Rosneft’s fleet of 20 Arc6 ice-class tankers is under construction.