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US targeted Novatek's Arctic LNG 2 project with sanctions

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Arctic LNG 2 suspended output, sources say

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Novatek seeks to rebuild relations with West, source says

By Anna Hirtenstein and Marwa Rashad

LONDON, Dec 13 - Russia's largest liquefied natural gas

producer Novatek is working with lobbyists in an attempt to

rebuild U.S. relations after Washington imposed sanctions on its

mammoth Arctic LNG 2 project, two sources familiar with the

matter said.

Russia's relationship with the United States hit a post-Cold

War low after Moscow's invasion of Ukraine in 2022, with

President Joe Biden's administration imposing sanctions on

hundreds of entities and individuals for backing the war effort.

These include Novatek's Arctic LNG 2, which was

set to become Russia's largest LNG plant.

The return of U.S. President-elect Donald Trump to the White

House on Jan. 20 is being viewed with cautious optimism by some

in Russia, although others think it will change little.

Trump pledged during his campaign to end the nearly

three-year-old war within 24 hours of his inauguration, if not

before. Novatek is seeking to rebuild relations with the West,

in anticipation of an end to the war in Ukraine, one source

said.

Its senior executive and management board member, Denis

Solovyov, travelled from Moscow to Washington in recent days to

begin work with a U.S. lobbying firm, the sources said.

Novatek and the lobbyists plan to approach U.S. government

entities in the coming weeks, the sources said.

Solovyov declined to comment when contacted by phone.

Novatek did not respond to a request for comment. The U.S. State

Department did not immediately respond to a request for comment.

Novatek hopes to get its flagship Arctic LNG 2 off the

current sanctions list, the second source said. Sanctions have

led to Arctic LNG 2 declaring force majeure on supplies and

suspending its production.

Both sources, who spoke on condition of anonymity due to the

sensitivity of the matter, said that Novatek will use its tax

status to appeal to the West and make the case that it is not a

financial contributor to Russia's war effort.

Other Russian gas firms such as Gazprom pay corporate tax,

which is considered one of the largest contributors to Russia's

budget and therefore indirectly financing the war.

Novatek-owned Yamal LNG, which is not sanctioned, enjoys

significant tax relief such as zero export duty on LNG and gas

condensate, as well as zero mineral extraction tax rate for

production of these fuels, a presentation to investors shows.

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.