The NOVATEK Arctic LNG 2 project is having problems

03.04.2024       

«Arctic LNG-2» — NOVATEK's second major LNG export project. In November 2023, it came under US sanctions, which included a ban on all operations with Arctic LNG-2. In December, NOVATEK warned customers of force majeure related to supplies from the project. After this, according to Kommersant, the foreign shareholders of Arctic LNG-2 refused their responsibilities for financing and fulfilling offtake contracts for LNG. — French TotalEnergies, Chinese CNPC and CNOOC, as well as a consortium of Japanese Mitsui and JOGMEC. Russia's largest liquefied natural gas (LNG) producer has suspended production at its Arctic LNG 2 project. due to sanctions and a shortage of gas carriers. Two sources familiar with the matter told Reuters on Tuesday.
The project had hoped to begin commercial deliveries in the first quarter of this year. But plans became more complicated last year when it was included in Western sanctions over the SVO, prompting foreign shareholders to freeze participation and NOVATEK to freeze participation. declare force majeure.
The decision to suspend the conversion of natural gas into LNG is a blow to Russia's ability to capture a fifth of the global LNG market by 2030-2035. It is now the world's fourth-largest LNG producer with annual exports of 32.6 million metric tons.
NOVATEK, which began pre-production of LNG in the first of three planned stages of the plant in December, did not respond to a request for comment. comments.
“The first train will be closed at least until the end of June”, — one of the sources told Reuters, adding that construction work on the project is still ongoing.
The remaining two trains are planned to be delivered to the site by sea from the port of Murmansk in the future.
However, the three tankers ordered by Sovcomflot, were canceled due to sanctions against Russia, Hanwha said in a regulatory filing last year.
Ice-class tankers typically have a double hull — reinforced structures that can withstand ice pressure, — and reinforced propellers.
According to public information, so far for Arctic LNG 2 Only three suitable gas tankers were built: the ships "Alexei Kosygin", "Petr Stolypin" and "Sergei Witte".
Russian Deputy Prime Minister Alexander Novak, answering the question when the "first batch of LNG from the project" will be delivered, said on Friday that "the company is dealing with these issues , relevant negotiations are underway.”
“Their main problem is tankers,” he added.
Ronald Smith,senior oil and gas analyst at Moscow brokerage BCS, said it was unclear when — and even whether — project to receive tankers.
“NOVATEK” very good management, and he may find a workaround to somehow get completed ships into the project in the near future, or these ships may remain in the shipyards for a long period of time,” — he said.
“Arctic LNG 2” heads Novatek, which owns 60% of the shares. Other shareholders include France's TotalEnergies (TTEF.PA), opens a new tab, China's CNPC and CNOOC, and Japan's Arctic LNG — consortium Mitsui & Co. Ltd. (8031.T), opens a new tab and JOGMEC — each of which owns 10% of the shares.
Mitsui declined to comment, and TotalEnergies referred comments to NOVATEK. The remaining shareholders were not available for comment.

Reuters

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