French engineering group Technip Energies has said it is making an “orderly exit” from its largest contract in Russia, Arctic LNG 2, with problems looming on the horizon for work on the liquefied natural gas scheme’s trains at a specialised shipyard near the Russian port of Murmansk.
Company chief executive Arnaud Pieton said in a third quarter financial statement that all operational personnel representing Technip Energies at the yard, have been withdrawn from the project, which is headed by Russian gas independent Novatek.
“We have signed an exit framework agreement with our customer, which we are currently implementing, and anticipate completing this process within the first half of 2023,” Pieton added.
Technip Energies was among the contractors and subcontractors to announce its withdrawl from the project earlier this year following the international sanctions imposed on Russia following its invasion of Ukraine in February.
The French company said this week it is now revising upwards its 2022 revenue guidance to between €6.2 billion ($6 billion) and €6.5 billion on the understanding it will receive some outstanding payments for work carried out on its Arctic LNG 2 contract.
In 2019, Technip Energies disclosed the value of its Arctic LNG 2 engineering, procurement and construction contract at $7.6 billion.
The contract called for the construction of the three LNG trains and associated topsides, which were to be manufactured on a modular basis at Chinese yards and assembled at the Belokamenka yard, with the assignment running to 2026 when the last train was scheduled to leave the yard.
The assembled topsides were to be installed on concrete gravity-based foundations and then towed to the shore of Russia’s Gydan Peninsula to process incoming gas from Russian gas independent Novatek’s fields.
During a a conference call on Thursday, Technip Energies executives played down the impact of the contract termination on the company’s finances, saying that Arctic LNG 2’s contribution to its third-quarter revenues was already insignificant.
Pieton called on the company’s shareholders to assess the company’s performance on its overall portfolio, rather than focusing on the Arctic LNG 2 contract that is “already behind us”.
“We have a good and predictable backlog of orders extending into 2023” that will permit the company to continue growing, he said.
Technip Energies said its total consolidated revenues for the January-September period fell marginally to €4.86 billion against the same period of 2021, but its net profit increased by almost 40% to €223 million.
Novatek executive chairman Leonid Mikhelson said last month that the first Arctic LNG 2 train will come online in December 2023.
And earlier this month he said his company had been successfull in partially relieving the pressure on Arctic LNG 2 brought about by the international sanctions.
According to marine traffic websites, the heavylift semi-submersible vessel Xin Guang Hua owned by China’s COSCO arrived at Belokamenka on Wednesday to unload modules from Bomesc Offshore Engineering for the project’s second train.
The delivery of the modules from Chinese yards had been put on hold since June, as country’s shipping comapnies and manufacturing yards assessed the risks of continuing their contracts in the face of international sanctions.
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