US Sanctions Against Russian LNG Start to Fray as Chinese Arctic Construction Yard Seeks Lifting of Measures
Modules TMS-003 to TMS-005 for Train 1 at the PJOE yard. (Source PJOE)
Ten months into the Trump Administration Russia’s Arctic LNG 2 operation continues to pick up steam as the White House has not announced any new sanctions against the sector. Now a Chinese manufacturer who previously provided LNG modules to Russia is seeking removal from the sanctions list. On the EU side two Arctic heavy lift vessels, Audax and Pugnax, were unsanctioned last week.
The U.S. sanctions regime against Russian Arctic development of liquefied natural gas (LNG) carefully assembled under the Biden Administration continues to erode.
The latest setback comes as Chinese firm Jutal Offshore Oil Services Limited is seeking the lifting of sanctions against its Penglai Jutal Offshore Engineering Heavy Industries fabrication yard.
The PJOE facility assembled and delivered key LNG modules for Novatek’s Arctic LNG 2 project. The U.S. sanctioned the project in November 2023 and barred the export of LNG technology and modules to Russia.
Seeks removal
Some yards and shipping companies continued deliveries, including Wison’s Zhoushan Yard and shipping company Red Box. PJOE was included in the 14 June 2024 round of U.S. sanctions.
Jutal announced its application for sanctions relief last week in a public filing. The U.S. Treasury Department did not respond to a request for comment to confirm the filing or speak to its chances of success.
“The Company wishes to update that Penglai Jutal has retained professional law firms to submit a written application of removal from the SDN List to OFAC on 14 October 2025. Currently, Penglai Jutal has ceased construction business of projects involving the SDN List,” the company stated.
Jutal company statement from October 14, 2025 announcing that it is seeking sanctions relief from the OFAC office in the U.S. (Source: Jutal)
Several companies unsanctioned
The move continues a trend of companies formerly involved in Russian Arctic LNG activity succeeding in lifting sanctions against their operations.
On the EU side, Japanese shipping operator MOL successfully lobbied Brussels to clear three of its liquefied natural gas carriers, North Moon, North Ocean, and North Light.
The vessels had been included in measures in May 2025. They were subsequently removed two months later after the company provided assurances that they would not be used to carry Russian LNG.
The EU also cleared sanctions last week for Red Box’s two heavy lift vessels, Audax and Pugnax. The ice-capable ships were essential for the completion of Yamal LNG and the construction of Arctic LNG 2 between 2017 and 2024.
The two vessels were among the earliest vessels the EU sanctioned back in 2024. It is unclear if the vessels are now under new ownership or what guarantees prompted Brussels to lift its sanctions. Red Box could not be reached for comment.
Currently en route to the facility.
Pace of deliveries picks up
Deliveries from the sanctioned Arctic LNG 2 project also continue to flow to China unhindered. The Beihai terminal in southern China has now received 11 shipments in just 8 weeks.
Another four vessels are currently en route to the facility.
In total the Utrenniy terminal at the Arctic LNG 2 project in the Russian Arctic has completed 19 loadings of supercool natural gas. Each shipment equates to approximately 70,000 tons of LNG valued at around $50m each.
Neither the U.S. nor the EU in their latest round of sanctions announced measures against the Beihai terminal or its owner, PipeChina.
Russia has also for the first time begun conducting an open sea ship-to-ship transfer of LNG; a further indication that it is finding way to circumvent the crumbling Western sanctions against its LNG sector.
The transfer of sanctioned cargo originating at the Baltic Portovaya plant took place last week off the coast of Malaysia between Russian and Chinese gas carriers.
