Russia’s Arctic LNG 2 seeks $1 billion in damages from South Korea’s Hanwha

Arctic LNG 2, a liquefied natural gas project led by Russia’s Novatek, is seeking about $1 billion in damages from South Korean shipbuilder Hanwha Ocean over canceled tanker construction contracts, according to a disclosure by Hanwha.

Arctic LNG 2, which is 60% owned by Novatek, was expected to become one of Russia’s largest LNG plants, with planned output of 19.8 million metric tons a year. But U.S. sanctions imposed over Russia’s actions in Ukraine have complicated its prospects.

Novatek began production at Arctic LNG in December 2023, but cargo deliveries to end-users, all in China, did not begin until August 2024.

Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering, had agreed to build six Arc7 tankers for the project, including three for Russia’s Sovcomflot and three for Japan’s Mitsui O.S.K. Lines.

However, Hanwha has previously said the three tankers ordered by Sovcomflot were canceled because of the sanctions on Russia.

In a disclosure dated September 3, Hanwha said Arctic LNG 2 had filed a claim with the Singapore International Arbitration Centre related to a shipbuilding contract that had been terminated.

The claim totals 1.37 trillion won, equivalent to about $1.02 billion.

Novatek did not immediately reply to a request for comment.

Related stories from around the North: 

Canada: Nuuk, Nunavut port proponents sign agreement on Arctic shipping cooperation, Eye on the Arctic

Greenland: ‘You just move forward’: Greenland Energy oil exploration delayed by a year, The Canadian Press

Norway: Resource extraction projects, dwindling sea ice, power Arctic shipping surge, Eye on the Arctic

Russia: Northern Sea Route cargo traffic to rise 14 per cent as Chinese shipping expands, says Rosatom, Eye on the Arctic