EXCLUSIVE – Italy freezes Russian Arctic LNG 2 plant loan – sources
Russia’s invasion of Ukraine prompted Italy to suspend its share of funding for the $21 billion Arctic LNG 2 project led by Russian gas producer Novatek, two sources familiar with the matter told Reuters on Tuesday. . Western allies have taken unprecedented steps to isolate Russia’s economy and financial system following the assault on Ukraine, which Moscow calls a “special operation”.
The energy sector has so far been spared, but sanctions targeting the industry remain on the table, White House press secretary Jen Psaki said Monday. The possibility of further sanctions prompted Italy to rethink its loan to the natural gas plant, which sources put at 500 million euros ($561 million).
Italian public lender Cassa Depositi e Prestiti (CDP) and the Russian branch of Italy’s biggest bank Intesa Sanpaolo had agreed in recent weeks to help fund Novatek’s project. The loan was to be guaranteed by SACE, Italy’s export credit agency, which has already secured nearly €5 billion worth of Russia-related projects and investments.
Speaking on condition of anonymity given the sensitivity of the matter, the sources said the loan had not been disbursed and that CDP and Intesa would now stand firm given the situation – joining a series companies limiting ties with Russia. Discussions over the fate of the loan are ongoing between Intesa, CDP, SACE and the Treasury, one of the sources said.
For now, the deal remains in place, said a third source familiar with the matter. All interested parties declined to comment.
Italy, which last week announced measures to increase national gas production to around 5 billion cubic meters per year from the current 3.2 billion, is seeking to diversify its gas supplies to reduce its dependence on live in Russia. Prior to the Ukrainian conflict, Arctic LNG 2 was scheduled to launch in 2023 and reach full production capacity of nearly 20 million tonnes of liquefied natural gas (LNG) per year in 2026.
Novatek announced in November loan agreements with foreign and Russian banks worth 9.5 billion euros, securing the external financing needed for the project. The shareholders of Arctic LNG 2 are Novatek (60%), TotalEnergies (10%), the Chinese CNPC (10%) and CNOOC (10%), as well as Japan Arctic LNG (10%), a consortium of Mitsui & Co , Ltd and JOGMEC.
Last year, representatives of the European Parliament expressed concern over potential support from EU member states for Arctic LNG 2 which they said was not compatible with climate goals. ($1 = 0.8921 euros)
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