U.S. slams Russia's Yamal LNG transfers in Norwegian waters

OSLO (Reuters) - Allowing ship-to-ship transfers in Norwegian waters from Yamal in Arctic Russia, one of the world’s largest liquefied natural gas (LNG) terminals, undercuts Europe’s energy diversification efforts, the U.S. State Department said on Friday.

FILE PHOTO: The Christophe de Margerie, an ice-class tanker fitted out to transport liquefied natural gas, is docked in Arctic port of Sabetta, Yamalo-Nenets district, Russia March 30, 2017. REUTERS/Olesya Astakhova

By transferring LNG to more conventional tankers in Norway, the Arctic vessels cut in half the distance they would cover to deliver gas to Europe, enabling more frequent shipments from the Novatek terminal and increasing Russia’s gas exports.

Last week, the first such transfer took place off the Norwegian Arctic port of Honningsvag.

Asked what was the U.S. position on the activity in Norwegian waters, the U.S. State Department told Reuters: “At a time when Russian gas comprises a growing proportion of Europe’s energy imports, additional volumes of Russian gas will undercut Europe’s energy diversification efforts.

“We are working closely with our European partners to increase their energy security by promoting diversification of energy fuel types, energy routes, and energy source countries.”

Russia condemned the U.S. position.

“Such statements are a definitive example of resorting to political instruments for the sake of unfair competition, (and) direct infringement of trade freedom principles,” the Russian embassy in Oslo said in a statement.

The United States has been pressing Europe to cut its reliance on cheap Russian gas and buy much more expensive U.S. LNG instead, which many European countries, including industrial heavyweight Germany, have so far resisted.

It has called on European countries to reject Russian gas pipelines, which Washington says are being used to cement Moscow’s grip on Central and Eastern Europe..

In particular, the United States has said it could impose new sanctions on Russia to try to block the construction of the Nord Stream 2 pipeline across the Baltic Sea to the European Union.

Norway, Europe’s second-largest supplier of gas after Russia, said it was not “concerned” by the ship-to-ship transfers.

“Europe has a well-functioning gas market. The planned ship-to-ship transfers of Russian LNG in northern Norway are a commercial project,” the Norwegian Ministry for Oil and Energy told Reuters.

“The fact that LNG is brought to the market via such transfers is not a concern for the ministry.”

Thanks to the ship-to-ship transfers off Norway, Yamal is expected to export as much as 11.7 million tonnes of LNG in the next seven months, according to the port hosting its ship-to-ship operations and Reuters calculations.

The ramp-up in output puts the Novatek terminal, in operation for less than a year, in excess of its nameplate capacity, with the Norwegian transfers the only way it can deliver the additional LNG to the market.

Yamal uses Arctic-class LNG tankers to carry the gas through the Barents Sea; these vessels then transfer the cargo to more conventional tankers in Europe, enabling them to return sooner to the facility and pick up more supplies.

Editing by Gwladys Fouche, David Holmes and Adrian Croft