US slaps Indian firms with anti-Russia sanctions

Washington has included two Mumbai-registered companies that it says are linked to the Arctic LNG 2 project

Washington imposed sanctions on Thursday on two Indian-based companies which it claims are linked to Russia’s Arctic LNG 2 project, which is partly owned and developed by Novatek, the country’s largest liquefied natural gas producer. 

The US State Department said in a statement that the sanctions are aimed at “imposing further costs on those supporting Russia’s war effort and attempting to expand Russia’s global energy leverage.”

The US Treasury included two companies – Gotik and Plio Energy, which are registered in Mumbai, India’s financial capital – in its Specially Designated Nationals and Blocked Persons (SDN) list. It also sanctioned two vessels owned by these companies for their alleged connection “to attempts to export” LNG from the Arctic LNG 2 project, which Washington sanctioned in 2023. Both vessels sail under the flag of Palau, according to the VesselFinder tracking site.

India is not part of the Arctic LNG 2 project, though Russia invited Indian companies to take part. At the same time, France’s TotalEnergies, China’s CNPC and CNOOC, and a consortium of Japan’s Mitsui & Co. and JOGMEC each hold 10% stakes in the project. After the US imposed sanctions in 2023, the foreign shareholders suspended their participation by declaring force majeure and renouncing their responsibilities for financing and for offtake contracts, according to Kommersant. 

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Reuters reported in August that Novatek may be forced to scale back the Arctic LNG 2 project, which was set to become Russia’s largest LNG plant with an eventual output of 19.8 million metric tons per year, following the US and EU sanctions. In its statement on Thursday, the State Department said the US government will “continue to answer attempts to operationalize” the Arctic LNG 2 project or “otherwise expand Russia’s energy capabilities.”

Both the US and EU earlier this year tightened sanctions against Russian LNG assets, which, apart from Arctic LNG 2, include three other Novatek projects – Obsky LNG, Arctic LNG 1, and Arctic LNG 3. While the sanctions initially focused on targeting technologies, services, and materials used for developing the projects, the 14th package of EU sanctions passed this June targets the shipment of LNG, including ship-to-ship and ship-to-shore transfers.

According to data from analytics firm Kpler, in 2023, Russia exported 32.3 million tons of LNG, making it the world’s fourth-largest exporter behind the US, Qatar, and Australia. Around 51% of these exports were delivered to Europe, 48% to Asia, and 0.2% to the Americas.

The US sanctions come days after the Financial Times claimed, citing leaked correspondences of Russian officials, that Moscow has been “secretly acquiring sensitive goods” in the South Asian country. 

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India, which has recently become Russia’s largest customer for crude oil, says Moscow has been instrumental in ensuring the nation’s energy security. On Thursday, Vinay Kumar, India’s ambassador to Russia, said at the Eastern Economic Forum in Vladivostok that India wants to increase energy imports.