Russia’s largest independent gas producer Novatek has allocated almost an entire additional year to complete construction of the first train for the Arctic LNG 2 project, which aims to export liquefied natural gas to international markets from West Siberia’s Gydan Peninsula.
Speaking at a conference in Vladivostok, in Russia’s far east, Novatek deputy chairman Yevgeny Ambrosov said that a concrete gravity-based foundation for the first of three trains will not be towed to the Gydan Peninsula until August 2023 at the earliest.
Each Arctic LNG 2 train is set to produce 6.5 million tonnes per annum of LNG and Train 1, which is 94% complete, remains in a shipyard in Belokamenka near the Russian port of Murmansk in the north of the country.
Its completion became delayed by Western sanctions against Russia in response to the invasion of Ukraine, with Western contractors banned from supplying equipment or related services to Russian LNG projects.
Sanctions have led to the withdrawal of key Western contractors such as Technip Energies and Saipem, responsible for the turnkey construction of three trains of Arctic LNG 2 in the Belokamenka yard, as well as a slew of international subcontractors.
US supplier Baker Hughes has declined to deliver compact LM9000 gas-powered turbines to supply power to the first train in order to avoid possible violation of Western sanctions, prompting Novatek to search for floating and onshore power solutions for the train in Russia and Turkey.
Despite these challenges, Ambrosov said Novatek still wants to commission Arctic LNG 2’s first train before the end of 2023.
However, he did not provide any update on the progress of construction of the other two trains in Belokamenka, which are still awaiting key modules to be supplied from China.
Sanctions have not affected Novatek’s plans to install two floating LNG storage and transshipment terminals, one near Murmansk and the other one near the Kamchatka Peninsula, Ambrosov said.
The delivery of the first LNG barge with 360,000 cubic metres of storage capacity to Murmansk is scheduled for December, with the second expected to arrive at the Kamchatka Peninsula in April 2023, he said.
A construction contract for these two units with South Korea’s Daewoo Shipbuilding & Marine Engineering remains in force, an industry source close to the gas producer told Upstream.
Daewoo has also cancelled an order from Russian state shipper Sovcomflot for two ice-class LNG carriers for Arctic LNG 2, tailored to move independently in ice up to two metres thick.
Ambrosov conceded that Novatek remains strongly dependent on the delivery of additional LNG carriers with ice-breaking capabilities and on the supply of nuclear ice-breakers by the Russian state to enable year-round eastbound LNG transportation, which remains unfeasible during Arctic winter months.
He said the company is counting on the Rosneft-controlled shipyard Zvezda in Russia’s far east to complete an order to build 15 tailored LNG carriers.
Russia’s Deputy Minister for Trade & Industry, Viktor Yevtukhov, said in Vladivostok that authorities expect Zvezda to deliver the first two of these carriers “soon”.
However, industry sources consulted by Upstream have contested the pronouncement, saying that even under the original schedule, approved before Western sanctions were introduced, the two vessels were not due to sail out in 2022.
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