(Seoul = Yonhap News) Reporter Kwak Min-seo = The New York Times (NYT) reported on the 23rd (local time) that a Russian energy company subject to U.S. sanctions is secretly financing the Alaska Liquefied Natural Gas (LNG) development project.
It is known that the issue of Alaska LNG development was recently discussed during negotiations between the United States and Russia to end the Russia-Ukraine war.
This can be interpreted as a situation where Russia is trying to obtain benefits, such as sanctions relief, in return for providing the technology and funds needed to develop LNG in the Alaskan polar region, which the Donald Trump administration strongly hopes for.
According to the NYT, Novatech, a Russian energy company subject to U.S. Treasury sanctions, is known to have recently provided some initial funding to the multibillion-dollar Alaska LNG development project promoted by U.S. startup Polar LNG.
It was initially reported that a company based in the United Arab Emirates (UAE) provided initial funding for Polar LNG's business, but the actual source of funds was the Russian company Novatek.
Joel Riddle, former CEO of Polar LNG, who resigned last month, revealed in an interview with the NYT, "I was given incorrect information about the source of the initial funds for the business."
“Allowing Russian technology to control the commercialization of Arctic natural gas on Alaska’s North Slope is not only illegal, it is also against the interests of the United States,” he emphasized.
He added that when he resigned last month, he urged the Trump administration to investigate the matter.
Polar LNG is dismissing former CEO Lidl’s claims.
Polar LNG claimed, “Riddle was recently fired for just cause, and the company is investigating his claims, which may lead to future litigation.”
However, according to a legal review memo from Polar LNG's law firm obtained by the NYT, the U.S. Treasury Department reportedly pointed out that the relationship between Polar LNG and Novatek could cause "potential problems" with respect to U.S. sanctions against Russia.
Novatech also announced in a statement to the NYT on this day that it is proceeding with procedures to secure the status of a 'minority shareholder' in the Polar LNG project.
The NYT pointed out, “This is a notable attempt by a Russian energy conglomerate to secure ownership of the U.S. gas production business.”
Another point of note is that a plan is being discussed to use ships built by Korean companies in the LNG development project promoted by Polar LNG.
Polar LNG is known to have planned to purchase a 640,000-ton gravity offshore structure (GBS) from Novatech, install it near the northern coast of Alaska, liquefy natural gas from this structure, and export it to the Asian market.
In this process, Hanwha Ocean is also pursuing a plan to use the icebreaking LNG carrier originally built by Russia's Novatech for the 'Arctic LNG 2' project.
Hanwha Ocean had canceled contracts for the ships or suspended contract performance in the aftermath of U.S. sanctions against Russia.
If this project is realized, Novatech will be able to make double profits by supplying its technology to the U.S. LNG development project and also securing shares in related businesses.
However, criticism has been raised that this not only goes against the purpose of U.S. sanctions against Russia, but also could give Russian President Vladimir Putin an advantage instead of responsibility for the war.
Jeffrey Pyatt, who served as Assistant Secretary of State for Energy Resources in the Biden administration, criticized Novatech's possible participation in the Alaska LNG project as "a terrible idea environmentally, economically, and geopolitically."
In particular, the United States and Russia are known to have recently discussed plans to develop Alaska LNG through cooperation between the two countries during negotiations to end the war in Ukraine.
According to officials familiar with the matter, President Putin met with U.S. President Donald Trump's special envoys Steve Witkoff and Jared Kushner last month to discuss Alaska LNG development plans.
The NYT reported that White House officials believe that such an 'energy deal' could improve relations with Russia and ultimately pave the way for an end to the war in Ukraine.
Moreover, the NYT reported that Gentry Beach, an American businessman who is close to the Trump family, is known to have been involved in the move to introduce technology from Russia's Novatech to Alaska.
Beach, a college friend of President Trump's eldest son, Donald Trump Jr., served as vice chairman for finance at the inauguration ceremony during President Trump's first term in 2017.
In an interview with NYT last February, Beach directly revealed that he had been negotiating with Novatech's natural gas technology over a plan to introduce it to Alaska.
However, it has not been confirmed whether Beach is still involved in the project or whether he was aware of Novatech's plan to secure a stake in Polar LNG.
A spokesperson for Trump Jr. said the two were no longer close and that Trump Jr. was not involved in the Polar LNG project.
Also, it is currently unclear whether the Polar LNG project can actually be accomplished.
With Novatech included in the U.S. sanctions list, pursuing a business using Novatech's technology and equipment requires separate approval from the U.S. Treasury, and technical and environmental issues must also be resolved.
“The Polar LNG project will face concerns about a multi-year licensing process and ties to Russia,” Matthew McManus, former deputy director of the U.S. State Department's Bureau of Energy Resources, told the New York Times.
The Polar LNG project is a separate project from the Alaska LNG gas pipeline project in which Korea, Japan, and Taiwan are currently considering investment participation.
The project in which Korea, Japan, and Taiwan are considering participation is to transport natural gas produced in the North Slope region of northern Alaska to the southern coast through a gas pipeline about 1,300 km long, then liquefy it and export it to Asia.
On the other hand, Polar LNG plans to install a liquefaction facility on the beach right next to the northern gas field and transport gas using a special LNG transport icebreaker that can penetrate the ice-covered sea.
Although it is still in the planning stage, the two businesses are in fact competing.
