Novatek, Russia’s Largest Liquefied Natural Gas Producer, Seeks to Rebuild US Relations
Russia’s largest liquefied natural gas producer, Novatek, is working with lobbyists in an attempt to rebuild relations with the United States following Washington’s imposition of sanctions on its Arctic LNG 2 project. The company’s senior executive, Denis Solovyov, traveled to Washington recently to begin working with a US lobbying firm, according to two sources familiar with the matter.
Novatek hopes to get its flagship Arctic LNG 2 project removed from the current sanctions list, which has led to the project declaring force majeure on supplies and suspending production. The company plans to approach US government entities in the coming weeks, using its tax status to appeal to the West and make the case that it is not a financial contributor to Russia’s war effort.
Russia’s relationship with the US hit a post-Cold War low after Moscow’s invasion of Ukraine in 2022, with the Biden administration imposing sanctions on hundreds of entities and individuals for backing the war effort. The return of President-elect Donald Trump to the White House is being viewed with cautious optimism by some in Russia, although others think it will change little.
Assistant Secretary of State for Energy Resources Geoffrey Pyatt suggested that the State Department was aware of Novatek’s visit to Washington, but noted that the company would make little headway with the Biden administration during its remaining weeks in office. “Now is not the time for business as usual with Russia,” Pyatt said. “Russia is in the penalty box and it’s my job to ensure it stays there as long as possible – certainly as long as the illegal war continues.”
Novatek-owned Yamal LNG, which is not sanctioned, enjoys significant tax relief, including zero export duty on LNG and gas condensate, as well as a zero mineral extraction tax rate for production of these fuels. The project has a 12-year tax exemption starting from when it became profitable, meaning it does not have to make payments to the Kremlin until 2030.
