By Anna Hirtenstein and Marwa Rashad
LONDON -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.
Assistant Secretary of State for Energy Resources Geoffrey Pyatt told Reuters that the State Department was aware of Novatek’s visit to Washington but suggested that the company would make little headway with the Biden administration during its remaining weeks in office.
“Now is not the time for business as usual with Russia,” Pyatt said. “Russia is in the penalty box and it’s my job to ensure it stays there as long as possible – certainly as long as the illegal war continues.”
Solovyov declined to comment when contacted by phone. Novatek did not 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 a 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.
(Reporting by Anna Hirtenstein and Marwa Rashad in London; Additional reporting by Timothy Gardner; Editing by Nina Chestney, Alexander Smith and Mark Porter)
