President of the European Commission

Ursula Von der Leyen

European Commissioner for Energy

Kadri Simson

European Commissioner for Financial Stability, Financial Services and Capital Markets Union

Mairead McGuinness

International Special Envoy for the Implementation of EU Sanctions

David O'Sullivan

Dear Ms. Von der Leyen, Ms. Simson, Ms. McGuinness, Mr. O’Sullivan,

Razom We Stand, on the eve of the adoption of the 13th package of sanctions, call on the European Union ar, to impose personal sanctions against Leonid Mikhelson – a chairman of the Management Board and member of the Board of Directors of Novatek, Russia's second largest gas producer, and take additional enforcement measures and secondary sanctions against provision of any equipment or services for Russian liquefied natural gas (LNG) projects in the 13th package of EU sanctions on Russia. We also call on you to advocate through leadership dialogues with national governments of the EU member states ending all purchases of Russian LNG.

On April 8, 2022 the European Union approved the 5th package of sanctions against Russia which included a ban on the provision of technologies and critical equipment for Russia’s LNG sector.

As revealed by a recent publication by Le Monde, French company Technip has violated these sanctions by continuing construction and delivery of modules for the second liquefaction train of the Arctic LNG 2 project throughout 2023, while the French government failed to deter the company from doing so.

Another case of circumvention and violation is demonstrated by the ongoing delivery of modules for second train by Red Box Energy Services. As High North News reported earlier this month that two Technip-designed modules for Arctic LNG 2 are being shipped from China by ice-class heavy lift carriers, operated by Red Box. They are due to arrive in Murmansk in February. Notably, Red Box Energy Services, currently based in Singapore, reportedly previously operated as RBES B.V., a Rotterdam-based private limited company. The change of registration clearly points to circumvention of EU sanctions and we urge to take necessary steps to prevent this from happening further and impose secondary sanctions.

Russia declared a goal to achieve 20% of the global LNG market by 2035 from around 8% currently and the leading role in achieving this goal belongs to Novatek under the leadership of Leonid Mikhelson, the man who for the past decades has been a close ally of Vladimir Putin and made billions on natural gas exports from the Arctic will now face additional troubles with pushing ahead with new energy projects.

Yamal LNG, Novatek's first major project, reports that as of September 2023, its cumulative LNG production volume has reached 100 million tons since the plant's start-up in December 2017. The Yamal LNG project has been outstanding in terms of timing and production efficiency, with the plant operating 20% above design capacity and the second and third 5.5 million tons per annum lines commissioned well ahead of the original schedule. An additional fourth line with a capacity of 0.9 million tons, based on NOVATEK's patented Arctic Cascade technology, significantly contributed to the project's success. Yamal LNG accounts for 5% of global LNG production.

"Arctic LNG 2" is the second project of the company's large-capacity gas liquefaction plant after "Yamal LNG". The total capacity of the three stages (6 million tons each) will be 19.8 million tons (more than 27 billion cubic meters). They will be commissioned one by one starting from 2023, with phased commissioning of the facility in 2023-2025 (the second stage - in 2024, the third - in 2026). Annual production of 19.8 million tons of liquefied natural gas is planned (compared to 16.5 million tons for the Yamal LNG project), as well as 1.6 million tons of stable gas condensate.

On November 02, 2023, Arctic LNG 2 was placed on the U.S. SDN list that imposed blocking sanctions on it.

In early December 2023, it became known that Novatek had registered Murmansk LNG LLC with an authorized capital of 100 million rubles. The company's core business is stated to be "production of hydrocarbons and their derivatives," with additional activities including pipeline transportation of gas, wholesale of liquefied hydrocarbon gases, and generation and transmission of electricity.  The plant is expected to have three liquefaction lines capable of producing 6.8 million tons of fuel per year. The first line is scheduled to start construction in August 2024, to be operational (simultaneously with the second line) by the end of 2027, and the third line by the end of 2029.

Novatek's and its management's continued expansion of Arctic exploitation and increase in LNG production is serving Russia’s strategic geopolitical plans, and provides for additional revenues to Kremlin’s war chest. Russia’s growing LNG exports is an important source of revenue for financing the ongoing agression in Ukraine. Therefore, the issue of imposing further sanctions on Russia’s LNG sector is critical.

Mikhelson is today sanctioned by the UK and is included in the Countering America’s Adversaries Through Sanctions Act. He is not sanctioned by the EU.

We point to the fact that both Russia’s export revenues and production volumes must decline and international sanctions must work towards dismantling the Russian fossil fuel industry, not keeping it afloat.

Success in its LNG export expansion plans would give Russia, having launched a cruel and destabilizing war in Europe, strong positions on the global LNG market. It would be a stunning and tragic outcome that would give Putin critical leverage in energy markets as he sought to do with Nordstream 1 and 2.

In view of the considerations mentioned above, we reiterate our call for immediate and decisive sanctions against the management of Novatek and coherent enforcement of existing sanctions, particularly those that ban the provision of equipment and services for Russia’s strategic energy projects.

We also call on you to advocate through leadership dialogues with national governments of the EU member states ending all purchases of Russian LNG, which provides finance to Putin’s war chest, as well as to cooperate with the US and G7 governments in securing strong enforcement of sanctions against Arctic LNG 2.

Sincerely,

Dr. Svitlana Romanko

Founder and Director

Razom We Stand