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UPDATE 1-Russia's Novatek says Arctic LNG 2 external financing suspended


This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine

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BAKU, Oct 28 (Reuters) - Russia’s largest liquefied natural gas (LNG) producer, Novatek, has suspended the use of external financing for its Arctic LNG 2 project but hopes for a resumption early next year, the head of the company said on Friday.

“Due to some technical changes that we have just made, we have suspended (using finances),” Leonid Mikhelson told reporters.

The West has introduced sweeping sanctions against Russia over Moscow’s actions in Ukraine, including restrictions on financing.

“I think, starting from the first quarter of next year, we will resume (financing) with the same creditors,” Mikhelson added.

Novatek planned to raise up to 9.5 billion euros ($9.45 billion), including up to 2.5 billion euros from Chinese banks, for the $21 billion Arctic LNG 2 project.

Russian banks were due to raise 4.5 billion euros for the project. Mikhelson said financing of about 6 billion euros is already in place.

Italy froze financing of the project in March over what Moscow calls a “special military operation” in Ukraine.

Novatek aims to start the first line of Arctic LNG 2 late next year with three operational lines, each having annual LNG capacity of 6.6 million tonnes.

Novatek holds a 60% stake in the project, with 10% stakes held by France’s TotalEnergies, Japan Arctic LNG (a consortium of Mitsui & Co and JOGMEC) and Chinese players CNPC and CNOOC.

Mikhelson also told reporters that the company will make a decision by December on its participation in Russia’s Sakhalin-2 project, which Shell exited this year.

$1 = 1.0055 euros Reporting by Oksana Kobzeva and Nailia Bagirova Writing by Vladimir Soldatkin Editing by Barbara Lewis and David Goodman