The former chief executive of a $25 billion U.S. gas export company has accused Russian energy giant Novatek of secretly controlling the project, triggering a mass resignation of the company’s leadership over fears it may violate U.S. sanctions.
The company, Polar Train LNG, is developing a gas export terminal on Alaska’s North Slope, part of a Trump administration initiative to increase U.S. energy exports to Asia and strengthen its position in global energy markets.
The company was launched with the participation of Gentry Beach, an investor linked to Donald Trump’s family. It was also raised in high-level negotiations between Washington and Moscow over possible trade deals that could help end Russia’s war in Ukraine, according to people familiar with the matter.
Polar LNG launched in March with the intention of repurposing a partially built Novatek gas terminal for a facility in Alaska. The company has requested permission from US sanctions authorities at the Treasury Department to negotiate with the Russian group, but has not yet received approval.
Joel Riddle, Polar LNG’s US managing director, told the FT he discovered Novatek was already financing the company and running its operations before the necessary approvals were obtained. He resigned in September, followed by almost the entire management team, including CFO Dan Chandra, executive vice president Jim Smith and chief execution officer Jody Trantham.
These allegations raise the question of the extent to which Russian business interests are already seeking a foothold in the U.S. energy sector before a deal is reached. They threaten to entangle a strategically important American energy project in tense relations between Washington and Moscow, despite the Trump administration’s sudden favorable turn towards Russia.
Polar LNG said in a statement that Riddle was a “disgruntled employee” and had been terminated from the company. “Development activities are conducted in full compliance with applicable U.S. laws,” the statement said.
A White House official said: “This was only briefly and widely mentioned to (the administration), but no granular discussion took place. »
In a statement, Novatek said it agreed to grant Abu Dhabi-based Tech Wave Industrial Projects Management the right to use its technology in Alaska and signed a memorandum of understanding in April with Polar Train when Riddle was chief executive.
“To carry out a project of this scale, the required approvals will have to be obtained from the American and Russian authorities,” Novatek said.
A Treasury official said: “While we do not comment on allegations of sanctions violations, we take potential violations extremely seriously. »
Novatek has developed a gas export facility on the northern coast of Russian Siberia, Arctic LNG 2, which is expected to produce almost 20 million tonnes of LNG per year. But it was blacklisted by the US Treasury in 2023 as part of a package of hundreds of sanctions imposed by the Biden administration to punish Russia for the invasion of Ukraine, and has struggled to become fully operational.
Under terms being negotiated between the United States and Russia, Novatek would lend its expertise to help build the Alaska facility in exchange for lifting sanctions on Arctic LNG 2, the sources said.
Novatek said: “We deny any third-party allegations of bad faith that access to our solution is conditioned on the lifting of sanctions from the Arctic LNG 2 project. Novatek is focused on the use of its technology in Alaska and views this opportunity as a stand-alone, self-sustaining project.
Riddle, a former ExxonMobil engineer recruited to run Polar LNG, said he initially thought the project was funded by Beach and Tech Wave. The company is led by Norwegian businessmen Rajeev Lehar and Bjørn Gundersen; Gundersen previously worked for Novatek. Tech Wave did not respond to requests for comment.
As the company began to take shape, Riddle said he learned that Beach had not invested in the company and was not a shareholder, officer or director of the company. As requests for financing increased, he said he became aware that Novatek was providing the capital.
“I resigned as CEO of Polar LNG because I felt uncomfortable with the idea that the Russian company Novatek was financing and ultimately controlling the strategic direction of the company,” Riddle said.
“Building an LNG facility in Alaska is a very strategic project for the United States and, as a patriot, I believe it should be developed using American technology and financed by American investors, not a Russian company.”
Beach did not respond to a request for comment.
Novatek said: “As far as we know, MG Beach was a departing officer of a Polar Eagle LNG LLC holding company and currently has no connection to the project or Polar Train LNG LLC/Polar Eagle LNG LLC. »
WhatsApp messages seen by the FT show Novatek senior executive and board member Denis Soloviev discussing financing the project and trying to “speed up the process of transferring money” to Polar Train LNG.
When a new sanctions package proposed by the late Senator Lindsey Graham was passed by Congress, Riddle sought the advice of the US law firm Baker Botts to assess the risks presented by the company’s strategy. It also sought advice on the sanctions risks presented by Gundersen’s role as the proposed ultimate investor in Polar LNG, due to its ties to Novatek.
In his opinion, Baker Botts said U.S. agencies “appear to view Mr. Gundersen’s proposed participation in the project as presenting potential Russia-related sanctions concerns.”
On September 19, a day after Congress passed the Lindsey Graham sanctions bill, Riddle delivered a letter of resignation to Gundersen.
Following Riddle’s resignation, Polar LNG named Tim Talkington, former managing director of Goldman Sachs’ Russian operations, as interim chief executive officer. Talkington did not respond to a request for comment.
Polar LNG said in a statement that TechWave had provided financing to Polar LNG and “initiated preliminary engineering work involving U.S. contractors.” “The project is looking for American investors and implementation partners,” he adds.
A recent thaw in relations between the United States and Russia suggests that Washington may still support Polar LNG. This month, Trump invoked a waiver of the Graham Act that exempts Moscow from economic sanctions. He also struck a deal with Vladimir Putin to import millions of tons of Russian diesel into the United States.
Additional reporting by Harry Dempsey in Tokyo
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