Russia's Novatek to Start Delivering Equipment for Arctic LNG 2's Next Phase in July
06.28.2024 By Tank Terminals - NEWS

June 28, 2024 [Reuters]- Russian energy company Novatek plans to start delivering the foundations for the second stage of its Arctic LNG 2 plant in late July, two sources familiar with the plans told Reuters on Thursday.

 

The plans show Novatek is pressing ahead with the delayed project despite Western sanctions that have restricted access to technologies and the availability of tankers to carry liquefied natural gas (LNG).

Industry sources said in April that Novatek was forced to scale back the $21 billion Arctic LNG 2 after Western sanctions curbed its access to ice-class tankers, and that it would focus instead on developing its project at the ice-free port of Murmansk.

Arctic LNG 2 tentatively began production of LNG on the Gydan peninsula, which juts into the Kara Sea, in December, but has yet to deliver its first LNG cargo.

Arctic LNG 2 had been planned as Russia’s largest such plant with eventual output of 19.8 million metric tons per year of LNG and 1.6 million tons per year of stable gas condensate from three trains.

However, last year it found itself included in Western sanctions over Russia’s conflict in Ukraine, prompting foreign shareholders to freeze participation and Novatek to issue a force majeure to warn it would not be able to honour contractual obligations.

Sanctions are also delaying Russia’s implementation of other gas and petrochemical projects.

Further complicating the project’s development, Chinese engineering firm Wison New Energies said last week it had decided to discontinue all of its ongoing Russian projects, and to immediately and indefinitely stop taking on any new Russian business.

One of the sources said that the deliveries of the gravity-based structures (GBS), that form a foundation for the LNG production site, from a plant in the Murmansk region in northern Russia for the second stage of the project would start on July 22-25.

Another source confirmed the dates.

They declined to be named because they were not authorised to speak publicly on the issue.

Novatek did not comment on the planned equipment delivery.

Belokamenka in the Murmansk region hosts the world’s first facility for mass production of natural gas liquefaction trains on GBS.

GBS platforms have been used in North Sea and other gas projects but Arctic LNG 2 is their first use in Russia.

Novatek, with a 60% stake, leads Arctic LNG 2.

Other shareholders are TotalEnergies (10%), China’s CNPC (10%) and CNOOC (10%), as well as Japan Arctic LNG (10%), a consortium of Mitsui & Co, Ltd. and JOGMEC.

Last year, Russian President Vladimir Putin oversaw the departure of Arctic LNG 2’s first line departure via the Northern Sea Route from the Murmansk region.

 

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