At the close of 2017, three years after the annexation of Crimea and the fighting in Donbass, Vladimir Putin visited Sabetta, the Siberian port, to witness the first methane-powered tanker and the newly opened terminal of Yamal LNG, one of the world’s largest gas production and liquefaction facilities. “Today is a great day for us,” said the Russian president with evident pride. The project had faced doubts about viability amid harsh Arctic conditions and U.S. sanctions, yet both the schedule and the budget were kept. Putin’s ambition to position Russia among the globe’s leading liquefied natural gas exporters moved a decisive step forward.
This Jamal region project matters because more than 90 percent of LNG destined for Europe originates from this area. Importers across the European Union include Spain, where Naturgy holds a long-term agreement with Yamal until 2041. Spanish subsidiaries of Met, Dxt, and Enet, along with Swiss traders, have also brought Russian gas to the peninsula since the early days of the Ukraine conflict. Market activity, whether on spot markets or through third-party firms, has been illuminated by data from Kpler and disclosed to the Prensa Ibérica group. Much of this revenue appears to flow into Kremlin-linked channels and benefit Novatek, the private company that controls Yamal with a 50.1 percent stake.
Novatek remains a cornerstone of the story as Russia’s second-largest gas producer, surpassed only by Gazprom. Unlike some state-controlled giants, Novatek is privately owned and not formally tied to the Kremlin, a status that has long attracted foreign participation. This private standing also matters because it sits atop the world’s third-largest gas reserves.
Moving Away From Novatek
Yet Vladimir Putin’s war and Kyiv’s resistance are reshaping perceptions. Last December, TotalEnergies, which owned 19.4 percent of Novatek and 20 percent of the Yamal project, began a phased exit from Russia. The company reduced its exposure and retained some interests, but Le Monde reported that much of its assets remain under Russian control. The decision reflects Brussels’ sanctions and the broader pressure on Novatek’s stake held by Gennadi Timchenko and related figures. The United Kingdom and Canada are among the jurisdictions that imposed or extended penalties on the company’s leadership.
Putin’s circle includes some of Russia’s wealthiest individuals who have backed Yamal’s ambitions. Kremlin support helped fund portions of the project, largely through state-backed subsidies that also involve Chinese partners. The consortium includes the China National Petroleum Corporation with a 20 percent share and the Silk Road Fund with 9.9 percent, while Chinese state banks contribute significant financing, reported at roughly $27 billion in total.
Moscow’s assistance extended beyond capital to tax policy and export incentives. Russian gas shipments to Spain benefited from favorable treatment and exemptions that some producers did not receive, sparking tensions within the sector. The Warsaw-based Center for Oriental Studies noted in 2018 that conflicts within Novatek’s ownership structure were a key factor sustaining the company’s favored status in the Russian energy landscape.
Yamal LNG Taxes
For the first 12 years of operation, Yamal LNG was exempt from export and mining taxes. Instead, a tax on income, described as a “preferred slice,” stood at 13.5 percent. This regime did not prevent contributions to the Russian treasury, which some analysts say help fund the war effort. Last year, Yamal’s profits reached 7,733 million euros at current rates, contributing to a reported 456 million in additional revenue after updated exchange-rate criteria were adopted. This year, the tax burden on LNG exports was projected to rise by about 3.4 percent, a measure intended to offset the budget deficit exacerbated by the conflict and reduced hydrocarbon revenues. According to Anne-Sophie Corbeau of the Center for Global Energy Policy, the arrangement keeps Spanish importers funding the Russian state through Yamal’s and Novatek’s taxes, albeit with a smaller yield than other LNG exports.
The flow of funds continues to empower Novatek’s major shareholders. Analysts suggest that this wealth reduces the likelihood of dissent among company leaders toward Moscow’s stance, even amid geopolitical pressures. Anna Mikulska of the Baker Institute notes the potential influence of such earnings on corporate positions tied to the Kremlin.
Repsol Contract
Among Spanish firms, Naturgy stands alone without a long-term tie to Novatek or its principal executives. Three years before the war began, a 15-year contract was signed for the import of Arctic LNG 2 and related projects, as reported by Novatek and echoed by various Spanish media. When EL PERIÓDICO questioned Naturgy, the company maintained that it no longer has contracts with Russian assets nor purchases LNG on a spot basis to meet immediate needs, aligning with the paper’s research findings.
Regarding the Novatek agreement, the company indicated that the shipments contracted before the war did not originate from Arctic LNG 2 or any other Russian asset and that recent shipments contracted with Novatek have come from the United States, a claim supported by a spokesperson from Repsol. This nuance reflects the complex, evolving nature of energy contracts in a sanctions-influenced market.