US sanctions two Indian firms for aiding Russia's Arctic LNG 2 project

US sanctions Indian ship management companies for violating American restrictions on Russia’s energy sector.

Listen to article

The United States has imposed sanctions on two Indian ship management companies, accusing them of aiding Russia’s Arctic LNG 2 project in violation of American restrictions on Russia’s energy sector.

According to a statement released on January 10 by the US Department of State, the two firms — Skyhart Management Services Private Limited and Avision Shipping Services Private Limited, both based in Gurugram, Haryana — allegedly managed two LNG carriers transporting cargo from the US-sanctioned Arctic LNG 2 project.

The US government stated that the companies violated Executive Order 14024, which targets entities materially supporting Russia’s energy sector.

The vessels Pravasi and Onyx, identified as properties of Avision, were also cited for their involvement in the transportation of liquefied natural gas (LNG).

The sanctions are part of broader US efforts to restrict operations linked to Russia’s Arctic LNG 2 project, a major initiative led by Novatek, Russia’s largest independent natural gas producer.

The project, situated on the Gydan Peninsula in the Arctic, aims to tap into vast natural gas reserves but has faced significant operational hurdles due to international sanctions imposed following Russia’s invasion of Ukraine in February 2022.

The Arctic LNG 2 project initially attracted international partners, including France’s TotalEnergies, China’s CNPC and Japan Arctic LNG, a consortium of Mitsui. However, sanctions by the US and its allies prompted France and Japan to withdraw.

In November 2023, the US imposed sanctions specifically targeting the Arctic LNG 2 project, further complicating its access to international markets.

In April 2024, a Reuters report revealed that the project had suspended gas liquefaction activities due to a shortage of tankers and the impact of sanctions. India has stated that it will not purchase oil or LNG from sanctioned Russian entities.

In September 2024, Oil Secretary Pankaj Jain reiterated that India would avoid any transactions involving the Arctic LNG 2 project due to international restrictions.

Despite this, India has continued to import significant volumes of discounted Russian crude oil. In July 2024, India imported $2.8 billion worth of Russian crude, accounting for nearly 40% of its total oil imports, positioning it as the second-largest buyer of Russian crude after China.

However, imports from Russia saw a 7% decline in October 2024 due to increased demand from Chinese refiners and a narrowing price discount.

Outgoing US President Joe Biden defended the new sanctions, emphasizing their role in supporting Ukraine’s independence and curbing Russia’s ability to sustain its military actions.

Biden acknowledged the potential for minor increases in gas prices but argued that the economic impact on Russia outweighed these concerns.

"It’s crucial to ensure Russia cannot continue its aggressive actions," Biden said during a press conference at the White House.

Russia’s Foreign Ministry criticized the sanctions, calling them an attempt to harm its economy at the cost of global market stability. Moscow has been offering discounted crude oil to offset the economic impact of sanctions, attracting buyers such as India and China.

The US sanctions also targeted several Chinese firms involved in the Arctic LNG 2 project, further escalating tensions in the global energy market.

Efforts to reach Skyhart Management Services and Avision Shipping Services for comment remain unanswered.