Two Chinese state banks have agreed to lend more than $12b to develop a Liquefied Natural Gas (LNG) plant in the Russian Arctic, in a boost for one of Russian President Vladimir Putin’s flagship projects after sanctions targeted its largest shareholder, Financial Times reported.

A financing deal for Yamal LNG, one of the largest in Russian corporate history, had been expected to be signed more than a year ago. However, negotiations were complicated by US and EU sanctions against Novatek, its majority shareholder. Novatek is part-owned by Gennady Timchenko, who is also under US sanctions as a member of Putin’s “inner circle”.

As The Wall Street Journal wrote, the Yamal LNG project –which will ship gas eastward around Russia’s Arctic seaboard to China and other Asian countries for half the year– had emerged as a test for the Kremlin’s ability to endure Western sanctions over its interventions in Ukraine. “The loans are targeted at the inner circle to show respect to Putin, that China cares and can help,” said Alexander Gabuev, chair of the Russia in Asia-Pacific program at Carnegie Moscow Center, a think tank.