UK-based TechnipFMC has handed a deal to Jiangsu China Nuclear Industry Libert (LBT) for construction of the last modules needed for Novatek's Arctic LNG 2 project, the Russian independent's second liquefied natural gas export project in West Siberia.

Two contractor sources said TechnipFMC has issued the letter of award to LBT, although it remains unclear if the commercial agreement has been signed yet.

The decision to make the award had been expected in early February, but the coronavirus outbreak has prevented executives of lead contractor TechnipFMC from travelling to China to finalise negotiations.

The sources said TechnipFMC opted for LBT over competitor Sinopacific Offshore & Engineering (SOE) even though the two offered similar prices.

The workscope of the engineering, procurement and construction deal covers the provision of Package 5 for the module work, including three steel pipe racks, each weighing 3000 tonnes.

Both LBT and SOE delivered modules for Novatek’s Yamal LNG project in Russia two years ago.

Together, they built 310 modules for the Yamal LNG project, weighing a total of 80,000 tonnes.

Chinese yards are operating near full capacity as new cases of Covid-19 continue to fall in the country.

However, sources said yards still face supply chain challenges as the country keeps its borders shut.

Sources said foreigners with Chinese visas granted only after 28 March are allowed entry, which has severely restricted movements of engineers working at yards.

Equipment supplies for projects from foreign vendors are also being delayed due to logistics constraints.

The Arctic LNG 2 project includes plans for three LNG trains, each set to produce 6.6 million tonnes per annum for a total capacity of 19.8 million tpa.

Operator Novatek is expected to commission the first train by the end of 2023.

Concrete gravity-based structures will be built at the Kola yard under construction near Murmansk. These structures with installed topsides then will be towed to the western shore of the Gydan Peninsula for installation.

To feed the project, Novatek aims to develop gas reserves from the Utrenneye field on the Gydan Peninsula, across Ob Bay from the Yamal Peninsula.

Novatek and its partners — including French supermajor Total — in September last year sanctioned the $21.3 billion Arctic LNG 2 development.

TechnipFMC is the lead contractor, with Chinese yards also sharing in the spoils, including Penglai Jutal Offshore Engineering, Cosco Shipping Heavy Industry, Wison Offshore Engineering, Bomesc Offshore Engineering and now LBT.

Novatek has a 60% stake in Arctic LNG 2, with Total holding a direct 10% stake but also an 11.6% indirect stake through its 19.4% holding in Novatek itself.

China National Petroleum Corporation and China National Offshore Oil Corporation each hold 10%, and the Japan Arctic LNG consortium of Japan's Mitsui and Jogmec holds 10%.

LNG

TechnipFMC hands Chinese contractor deal for Novatek LNG development