Several of Russia’s biggest projects in the Arctic are at risk, as sanctions deprive developers of western technology and investments, making Moscow more reliant on China.
At least five Chinese companies will have to stop work on Russia’s Arctic LNG 2 project by the end of this month. Fabricators given deadlines to stop work on units for second and third trains.…
The Chinese withdrawal from the project comes after similar decisions by European companies like Linde and Siemens. The latter were crucial providers of liquefaction technology which Novatek didn't manage to import substitute.
There is likely to be major consequences also for Novatek’s new plant in Murmansk, the Belokamenka yard, where LNG production platforms are manufactured.…
Getting all 15 Arc-7 class vessels will be difficult too. S Korean shipbuilder DSME cancelled a vessel for Arctic LNG-2 after Sovcomflot sanctioned by the West missed a payment deadline. DSME was the key partner for Rosneft-led Zvezda shipyard.…
Financial sanctions on VEB, Sberbank and Otkritie will cause problems with securing financing. The three 🇷🇺 banks were supposed to provide $4.5bn out of $9.5 bn. Company CEO Mikhelson himself admitted that the development of projects is getting complicated.
The Japanese state-backed JBIC was planned to provide €1,71 bn. After the invasion, JBIC announced that will no longer continue its 'business as usual' approach. JBIC will consider terminating the loans to Arctic 2 LNG and Yamal LNG.…
That leaves Russia at China's mercy. Before the invasion, Russia sought to lure international partners, esp. Japan and India, in the development of the Arctic to hedge against the overreliance on China. Now China is the prime partner, forcing Russia to change the narrative.
"Russia positively assesses the role of Chinese companies in energy projects in the Arctic and would welcome the participation of Chinese business in other regional activities," said Korchunov, as the work of the Arctic Council resumed.…

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More from @maria_shagina

May 19
As part of my previous work in Helsinki, this paper for @HybridCoE analyses sanctions as a strategic concept of deterrence and coercion. It examines the successes and pitfalls of the past sanctions on Russia and presents conclusions on how to maximize their use today:
The art of imposing sanctions rests on key principles which are valid regardless the context. One of the principles is that the threat of sanctions is more effective than their actual imposition. Yet, it doesn't mean that sanctions can be rubber-stamped.
The context and the actor-specific characteristics matter for imposing sanctions. Assessing the target’s interests and rationale and understanding what drives a particular target is a starting point for calibrating the sanction response.
Read 13 tweets
May 2
Vladimir Potanin’s Interros Capital Ltd acquired United Card Services, one of Russia's largest independent processing companies. It accepts bank cards of the main payment systems Mir, Visa, MasterCard, JCB, UnionPay, American Express.
The move aims to insulate Russian Mir cards from any sanctions-related risks. Credit card processing centers have remained the Achilles heel of the National Payment Card System.
In 2019, when the US sanctioned Evrofinance Mosnarbank, a joint Russian-Venezuelan bank, Visa and Mastercard suspended the membership of Evrofinance Mosnarbank in their payment systems, leading to card blockage abroad and in Russia, including the bank’s own ATMs.
Read 5 tweets
May 1
Western sanctions didn't deter Russia, but they might be having a deterring effect on China: Beijing is very concerned with Western weaponziation of finance = freezing central bank assets.…
"Chinese regulators had an emergency meeting with domestic and foreign banks to discuss how they can protect the country's overseas assets from US-led sanctions similar to those imposed on Russia". The officials couldn't find a good solution to China's financial decoupling.
China hold the world's largest foreign reserves—$3.2 tn, half of which are denominated in the US dollar. China also holds more than $1 tn US Treasury bonds and dumping it like Russia did isn't an option. China is also constrained with options for diversifying its foreign reserves
Read 6 tweets
Apr 27
Poland seeks to create new powers within the EU to make it easier for the seized Russian assets to be redirected towards the reconstruction of Ukraine. Legal redress at EU courts and differences in national competencies will make it challenging.…
As the case of misappropriation sanctions showed, there are formidable legal hurdles to asset seizures in member states, including stringent safeguards and requirements on due process that make it difficult to confiscate property outside the framework of a criminal trial.
While morally it's justifiable that Russia should pay for the reconstruction, legally the EU's position is that safeguards on due process should be guaranteed. While EU sanctions provide a legal basis for freezing assets, they don't equate to grounds for confiscation.
Read 11 tweets
Apr 26
Russia is pushing ahead with its digital rouble project. The CBR plans to begin testing settlements with CBDC as early as 2023. The full launch of the digital ruble should take place before 2030.…
Nabiullina emphasized that the digital currency will play a special role, now when Russia is under Western sanctions. The digital ruble can be used in the implementation of govt programmes, as it will allow to track the use of funds more effectively.
The digital rouble is expected to facilitate not only settlements inside Russia, but also cross-border payments with its partners - the EAEU and Africa.…
Read 4 tweets
Apr 15
Russia is to accelerate its pivot to Asia (once again). The govt has instructed to submit a plan for the reorientation of infrastructure - energy pipelines, ports and railways - to the East by June 1st. Diversification to the East is very tricky though.
Russia's infrastructure is heavily oriented towards the West. Take oil: the majority of Russian oil goes to Europe - ca. 140 mln t via the Druzhba pipeline vs. ca. 40 mln t towards China via the ESPO pipeline.
The absence of a strategic petroleum reserve and insufficient pipeline transmission capacity will limit how much additional oil Russia can send to mainland China.
Read 13 tweets

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