The Arctic is gaining increasing international importance due to its vast natural resources, especially natural gas. Russia plays a central role in this context, particularly through its liquefied natural gas (LNG) projects. However, since 2022, Western sanctions have had significant effects on these activities and on the economic situation of Russian companies.
The company Novatek recorded a sharp decline in its profits in 2025. These fell from 493 billion rubles in 2024 to 183 billion rubles, representing a drop of more than 60 percent. This occurred even though hydrocarbon production increased slightly by about one percent. The decline in profits is therefore mainly due to external factors.
One major cause is the sanctions imposed by Western countries, which particularly affect the Arctic LNG 2 project. Due to these restrictions, the project can only operate at reduced capacity. In addition, Russia is forced to sell its gas at discounts of 30 to 40 percent, mainly to China. Transport has also become more complicated, as alternative methods such as ship-to-ship transfers and the use of specialized fleets are often required, increasing costs.
Looking ahead, further tightening of sanctions is expected. The European Union is planning a complete ban on imports of Russian LNG after a transition period expires. Additional restrictions in areas such as shipping, insurance, and vessel maintenance could further increase the pressure. This would require longer transport routes, leading to even higher costs.
International companies are also affected by these developments. The French energy company TotalEnergies holds stakes in Russian LNG projects, including Yamal LNG. CEO Patrick Pouyanné stated that redirecting supplies to other markets would be possible if the EU ban applied only to Europe. However, the European Commission clarified that European companies will not be allowed to reroute such deliveries to other countries.
Overall, these developments show that sanctions are having significant economic consequences for Russia and its Arctic energy projects. Despite stable production levels, more difficult trading conditions, falling prices, and rising costs are leading to substantial profit losses and a tense situation in the region.
Heiner Kubny, PolarJournal