Two Indian firms sanctioned by US for 'aiding' Russia's Arctic LNG project

The US has announced sanctions on two Indian firms for allegedly aiding Russia's Arctic LNG 2 project, in violation of its energy curbs aimed at crippling Moscow's revenue streams amid the Ukraine war

The US government has announced sanctions on two Indian ship management companies for their alleged involvement in the transportation of Russia's liquefied natural gas (LNG). The firms, the US government said, violated America's curbs on Russia’s energy sector, the primary source of revenue fuelling Moscow's war against Ukraine.

 

In a statement released on January 10, the US Department of State said the two firms, Skyhart Management Services Private Limited and Avision Shipping Services Private Limited, managed two LNG carriers that loaded cargo from the US-sanctioned Arctic LNG 2 project. Both the firms are based in Gurugram, Haryana.

 

"Skyhart and Avision are being designated pursuant to section 1(a)(vi)(B) of E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of LLC ARCTIC LNG 2," the release read.

 

 

The US State Department identified two vessels - Pravasi and Onyx - as properties of Avision, which are involed in the Russian LNG transport.

 

Business Standard has reached out to both the firms for a comment. Their response is awaited.

 

Besides the two Indian firms, several Chinese firms were also sanctioned for their involvement in the Arctic LNG 2 project.

 

What is the Arctic LNG 2 project?

 

The Arctic LNG 2 project is a major liquefied natural gas (LNG) initiative in Russia, led by Novatek, one of the country's largest natural gas producers. The project is located on the Gydan Peninsula in the Arctic region and is designed to tap into the vast natural gas reserves in the area.

 

France's TotalEnergies, China's CNPC and CNOOC, and Japan Arctic LNG (a consortium of Mitsui and JOGMEC) were the international partners involved in the project. However, after Russia's invasion of Ukraine in February 2022 and subsequent sanctions announced by the US and its allies, France and Japan pulled out of the project.

 

In November 2023, the US imposed sanctions on the Arctic LNG 2 project, restricting its operations and access to international markets. In April 2024, a Reuters report indicated that Arctic LNG 2 had suspended gas liquefaction activities due to the lack of necessary tankers and the impact of sanctions.

 

India's energy needs from Russia

 

Hit by sanctions, Russia has been offering its crude oil at discounted rates to attract buyers. India, heavily reliant on oil imports, seized this opportunity to enhance its energy security and reduce costs.

 

In July 2024, India imported approximately $2.8 billion worth of crude oil from Russia, accounting for nearly 40 per cent of its total oil imports. This positioned India as the second-largest buyer of Russian crude, following China. 

 

However, in October 2024, there was a 10 per cent month-on-month decline in India's overall crude oil imports, totaling 4.24 mbpd, according to energy cargo tracker Vortexa. Imports from Russia decreased by 7 per cent during this period, attributed to increased demand from Chinese refiners and a narrowing discount on Russian crude.

 

India has maintained that it won't be buying oil from any sanctioned Russian entity. In September 2024, Oil Secretary Pankaj Jain said that India would not buy LNG the Arctic LNG 2 project due to international sanctions.

 

'Last minute sanctions to help Ukraine'

 

Speaking about the fresh sanctions, outgoing US President Joe Biden said the move was to help Ukraine maintain its independence and fight against Moscow.

 

"It is probable that gas prices could increase as much as $0.03 to $0.04 a gallon, but that's going to have a more profound impact on Russia's ability to continue to act in the way it's acting in the conduct of war," Biden told reporters at a White House news conference.

 

"I already decided that Putin's in tough shape right now. I think it's really important that he does not have any breathing room to continue to do the God-awful things he's continuing to do. As I said, he's got his own problems economically, significant problems economically as well as politically at home," he added.

 

In response, Russia's Foreign Ministry denounced the new US sanctions, calling them an attempt to harm Russia's economy at the risk of destabilising global markets.