TOKYO, Oct 31 (Reuters) - Japan's Mitsui O.S.K. Lines ( MSLOF )

may be unable to deliver tankers for Russia's

sanctions-hit Arctic LNG 2 project, it said on Thursday, in a

blow to the plant that only began producing late last year and

halted operations this month.

Tougher Western sanctions on Russia mean MOL needs to modify

the charter contracts, it said on Thursday, and has already

started the related talks.

Between 2020 and early 2022, MOL signed charter deals for

three ice-breaking liquefied natural gas (LNG) vessels and a

condensate ice-breaker for the Arctic LNG 2 project. The U.S.

placed the plant under sanctions after Russia invaded Ukraine in

February 2022, part of wider measures on Moscow.

"Should the negotiation encounter difficulties, we may be

unable to perform these charter agreements. In the event that

the charter agreements are discontinued, we will seek to sell

the vessels to third parties," MOL's statement said.

In all, it said it had invested 105 billion yen ($689

million) in the vessels and, given the possible difficulties in

using the ice-breakers for other businesses, it may face losses

if it cannot sell them at a high enough price.

The three ice-breaking LNG carriers for the Arctic LNG 2

project were set for operation last year and the condensate

carrier was to be delivered in 2024 to ship LNG and condensate

via the northern route in the Arctic to Europe and Asia.

Separately, Russian daily Kommersant reported this week that

Russia's Zvezda shipyard has again delayed delivery of two

ice-class Arc7 gas carriers for the Arctic LNG 2 project to 2025

from initial 2023.

A person familiar with the matter told Reuters this month

that Arctic LNG 2 has shut down commercial operations at its

first and only operational train with no plans to restart it

during winter.

Russia's Novatek is leading the project with a 60%

stake. Other shareholders are France's TotalEnergies,

China's CNPC and CNOOC, as well as Japan's Mitsui ( MITSF ) and

the state agency JOGMEC.

($1 = 152.3500 yen)