Japanese shipping giant Mitsui OSK Lines Ltd. announced it could face losses on its contracts for liquefied natural gas (LNG) carriers linked to Russia’s Arctic LNG 2 export project, now under sanctions. Due to sanctions from the U.S. and Europe aimed at reducing Russia’s energy revenue, Mitsui OSK had to adjust charter contracts for three LNG carriers and an ice-breaking condensate tanker associated with the project, the company stated on Thursday. A company spokesperson confirmed the vessels’ connection to Arctic LNG 2.
Mitsui OSK is currently negotiating with involved parties but has indicated it may sell the vessels if fulfilling the contracts proves unfeasible. The company revealed it may not recover its 105 billion yen ($687 million) investment in these four ships, reflecting the financial impact of sanctions on Russia’s energy sector. This highlights the global reach of the sanctions aimed at pressuring Russia by targeting strategic projects, particularly those in energy, a key revenue source for Moscow.
The Arctic LNG 2 project was sanctioned by the U.S. last year as part of a broader strategy to restrict Russia’s access to international revenue from fuel exports. Mitsui OSK has previously explored the possibility of selling the ships or transferring the contracts as part of its response to these restrictions.
Despite the potential losses, Mitsui OSK’s shares rose by up to 5.8% in Tokyo trading, buoyed by the company’s announcement of a buyback plan of up to 100 billion yen. Analyst Tsuyoshi Hori from Mito Securities Co. noted that the buyback plan came as a slight surprise, providing some optimism to investors.
This situation underscores the economic impact of sustained sanctions on Russia, illustrating how limitations on high-value projects like Arctic LNG 2 restrict financial inflows, contributing to broader geopolitical pressure.
