A tanker carrying liquefied natural gas from a sanctioned project in Russia's Arctic has arrived in Boston Harbor, where it will be offloaded for American users.
The Treasury Department issued sanctions aimed at weakening Russia's energy sector in July 2014, after Russia annexed Crimea and backed separatists in eastern Ukraine. The sanctions forbid any financing for projects belonging to Novatek, Russia's largest independent producer of natural gas.
But the Treasury sanctions do not prohibit the purchase of natural gas that originated from Yamal, according to experts on U.S. sanctions who spoke on the condition of anonymity because they are not authorized to speak for the U.S. government.
A recent cold snap in New England and the shortage of pipeline capacity from gas-rich Pennsylvania have created an appetite for natural gas imports even as the United States has begun exporting LNG from other terminals on the Gulf Coast. Earlier this month, some utilities resorted to burning relatively costly oil to meet demand.
The LNG terminal, owned by the giant French multinational Engie, has been in operation for more than 40 years and meets about 20 percent of the market demand for gas supplies in New England and the Northeast.
The LNG cargo in Boston Harbor did not come directly from Yamal, but rather through a chain of companies and locations.
The blue-hulled tanker in Boston Harbor is owned by Engie. The cargo was picked up three weeks ago at a storage terminal in Britain called Grain, according to the industry newsletter LNG World News.
In Britain, the cargo was the subject of controversy. When the LNG was on its way to Britain, the Russian Embassy in London tweeted: "Feeling cold? Help is on the way — first shipment of LNG from Russia arrives in UK today!" It showed a photo of the tanker that had picked up the cargo in Russia.
But the owner of the Grain terminal, National Grid, tried to dampen outcry there by saying that the LNG was not needed and would not be used in the United Kingdom but would be reexported.
The LNG was delivered to Britain by the LNG tanker Christophe de Margerie, whose namesake was the late chief executive of Total, a French company that owns 20 percent of the Yamal project. Total was allowed to finish the project, which was underway when sanctions were imposed. China National Petroleum owns 20 percent of the project.
Other projects have been put on ice as a result of international sanctions. ExxonMobil dropped plans to team up with Russian oil company Rosneft to spend up to $550 million in the Arctic. And Royal Dutch Shell has suspended a prospecting project with Gazprom in a large Russian shale-oil field. Oil services giant Schlumberger has had trouble completing the purchase of a controlling stake in the Russian exploration company Eurasia Drilling.
The Christophe de Margerie is among a fleet of 15 ice-breaking tankers needed to reach the Yamal project. It is in a remote region that is frozen for seven to nine months a year and where winter temperatures can drop to minus-50 degrees Celsius.
Along the way to Boston, the LNG changed hands another time. At one point, it was sold to Petronas LNG UK, a British-based unit of the Malaysian energy giant Petronas, according to LNG World News. That could further blur the lines of Treasury sanctions.
Most of the exports from the Yamal LNG project are expected to go to Asia.
Both China and Japan are willing to help Novatek with its next big Arctic projects, undercutting U.S. efforts to hurt Russia's energy sector. World Maritime News reported that during a meeting between Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe, Novatek signed memoranda of understanding with Mitsui, Mitsubishi and Marubeni to help finance further LNG expansion in Russia's Yamal region.
For the completed Yamal project, Chinese banks provided $12 billion in loans and the state-sponsored China Silk Road Fund bought a 9.9 percent stake after U.S. sanctions were imposed.