Novatek, Russia’s largest independent natural gas producer, plans to acquire 10 ice-class/ice-resistant liquefied natural gas (LNG) carriers owned by Japanese shipping giant Mitsui O.S.K. Lines (MOL) and South Korean shipbuilder Hanwha Ocean; negotiations among relevant parties have already begun.
According to TradeWinds, Novatek’s Singapore-based subsidiary, Novatek Gas & Power Asia, recently held talks with representatives from MOL and Hanwha Ocean. The core agenda focused on the acquisition of six newly built 172,600 m³ Arc7 icebreaking LNG carriers and four 174,000 m³ Arc4 ice-resistant LNG carriers.
The construction contracts for six Arc7 icebreaking LNG carriers were signed in 2020, and all vessels are currently docked at Hanwha Ocean’s Geoje Shipyard. They were originally ordered by MOL (three vessels) and the Russian state-owned shipping company Sovcomflot (three vessels).
Since the escalation of the Russia-Ukraine conflict in 2022, three of these icebreaking LNG carriers have been listed under Western sanctions against Russia—specifically, the three ordered by Sovcomflot as the shipowner. The three vessels ordered by MOL had originally been covered by long-term charter contracts and were scheduled for deployment in the Russian Arctic LNG 2 project developed by Novatek; however, as that project is also subject to sanctions, the relevant vessels have consequently been affected. As a result, all six icebreaking LNG carriers are currently stranded at the shipyard due to sanctions.
In 2025, MOL indicated that it might renegotiate the charter contracts for the three icebreaking LNG carriers and one condensate carrier mentioned earlier, and made it clear that if negotiations broke down, it might sell the vessels to a third party.
It is understood that the three icebreaking LNG carriers were ordered by Russian shipowners (Elixon, Azoria, and Glorina) from Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean). At the time, the total contract value was approximately $850 million, with each vessel costing about $283 million. The vessels were originally scheduled to be completed and delivered by July 31, 2023.
However, due to delays or disruptions in the supply of key equipment and materials caused by Western sanctions, as well as the Russian shipowners’ inability to make progress payments on time, Daewoo Shipbuilding & Marine Engineering issued announcements in May, July, and November 2022, respectively, terminating the construction contracts for the three icebreaking LNG carriers. Shortly thereafter, Daewoo Shipbuilding & Marine Engineering was acquired by Hanwha Group and renamed Hanwha Ocean, and construction of the three new vessels was taken over by Hanwha Ocean.
In the first quarter of 2024, Hanwha Ocean announced that all three icebreaking LNG carriers ordered by Sovcomflot had been completed and stated that it would seek new owners for the vessels. However, as of now, no shipowner has expressed interest in taking delivery of the vessels.
Apart from sanctions, icebreaking LNG carriers are specifically built for the extremely harsh climatic conditions of polar regions. They are not well-suited for deployment on other routes and have a higher construction cost per vessel, which also means it is difficult for Hanwha Ocean to find suitable buyers for them. At the time, it was suggested that Hanwha Ocean convert these three specially designed LNG carriers into FSRUs/FSUs to explore resale opportunities. However, the shipbuilder rejected this proposal, citing concerns over conversion costs and the time required for the conversion process.
It is also worth noting that, following Hanwha Ocean’s withdrawal from the contract, the Russian shipowner filed for arbitration with the Singapore International Arbitration Centre, seeking $877 million in damages from Hanwha Ocean. The arbitration proceedings are still ongoing.
In addition to the six vessels currently stranded at Hanwha Ocean’s Geoje Shipyard, four Arc 4 ice-class LNG carriers are also a key focus of the acquisition negotiations. In May 2025, the European Union initially imposed sanctions on three of these ice-class LNG carriers, but following intensive diplomatic lobbying by the Japanese government and MOL, the sanctions against the three vessels were suddenly lifted two months later.
Reports indicate that Novatek’s large-scale procurement of LNG carriers is aimed at addressing the EU’s embargo on Russian-produced LNG, which is set to take effect on January 1, 2027. Once the sanctions take effect, long-distance shipments from Russia to Asia and other eastern regions will become inevitable, making it imperative to increase transport capacity.
To reduce its reliance on foreign sources, Russia is simultaneously building its own fleet of LNG carriers. However, of the 21 new vessels originally planned, only one has been delivered to date: the “Alexey Kosygin”, which was delivered at the end of 2025. This vessel is the first in a series of LNG carriers built by the Zvezda for the Arctic LNG 2 project, and it is also Russia’s first domestically produced Arc7 ice-class LNG carrier.
Although Zvezda plans to deliver two more Arc7 icebreaking LNG carriers to Sovcomflot in 2026, the overall schedule remains severely behind schedule.