Tanker carrying first LNG from Russia's Arctic exported by Yamal facility arrives in Boston

The Gaselys liquefied natural gas (LNG) tanker sits at the Engie SA Everett import terminal in Boston, Massachusetts, on Jan 28, 2018. PHOTO: BLOOMBERG

BOSTON (WASHINGTON POST) - A tanker carrying liquefied natural gas (LNG) from a sanctioned project in Russia's Arctic has arrived in Boston Harbour, where it will be offloaded for American users.

The giant tanker is carrying the first LNG exported by the Yamal facility, a US$27 billion (S$35 billion) project whose majority owner is the Russian company Novatek. As of Sunday (Jan 28) evening, the tanker was in the Mystic River at an LNG terminal, where the liquefied gas will be turned back into gas form and distributed to consumers.

The Treasury issued sanctions aimed at weakening Russia's energy sector in July 2014, after Russia annexed Ukraine's Crimea and after Russia backed separatists in eastern Ukraine. The sanctions forbid any financing for projects belonging to Novatek, Russia's largest independent producer of natural gas.

But the Treasury sanctions do not prohibit the purchase of natural gas that originated from Yamal, according to experts on US sanctions who spoke on the condition of anonymity because they are not authorised to speak for the US government.

A recent cold snap in New England and the shortage of pipeline capacity from gas-rich Pennsylvania have created an appetite for natural gas imports even as the United States has begun exporting LNG from other terminals in the Gulf Coast region. Earlier this month, some utilities resorted to burning relatively costly oil to meet demand.

The LNG cargo in Boston Harbour did not come directly from Yamal, but rather through a chain of companies and locations.

The blue-hulled tanker in Boston Harbour is owned by Engie, a giant French multinational company formerly known as GDF Suez. The company has LNG terminals alongside the Mystic River facility. The cargo was picked up three weeks ago at a storage terminal in Britain called Grain, according to the industry newsletter LNG World News.

In Britain, the cargo was the subject of controversy. When the LNG was on its way to Britain, the Russian Embassy in London tweeted: "Feeling cold? Help is on the way - first shipment of LNG from Russia arrives in UK today!" It showed a photo of the tanker that had picked up the cargo in Russia.

But the owner of the Grain terminal, National Grid, tried to dampen outcry there by saying that the LNG would not be used in the United Kingdom but would be re-exported.

The LNG was delivered to Britain by the LNG tanker Christophe de Margerie, whose namesake was the late chief executive of Total, a French company that owns 20 per cent of the Yamal project. Total was allowed to finish the project, which was underway when sanctions were imposed. China National Petroleum Corp owns 20 per cent of the project.

Other projects have been put on ice as a result of international sanctions.

ExxonMobil dropped plans to team up with oil major Rosneft to spend up to US$550 million in the Arctic.

And Royal Dutch Shell has suspended a project with Gazprom in a large Russian shale oil prospect.

Oil services giant Schlumberger has had trouble completing the purchase of a controlling stake in Russian exploration company Eurasia Drilling.

De Margerie is among a fleet of 15 ice-breaking tankers needed to reach the Yamal project. It is in a remote region that is frozen for seven to nine months a year and where winter temperatures can drop as low as minus 50 deg C.

Along the way from Yamal to Boston, the LNG changed hands another time. At one point, it had been sold to Petronas LNG UK Ltd, a British-based unit of the Malaysian energy giant Petronas, according to LNG World News. That could further blur the lines of Treasury sanctions.

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