Technip Energies suspends most work on Arctic LNG 2
MOSCOW. July 28 (Interfax) - France's Technip Energies, the leader of a joint venture with Italy's Saipem and Russia's NIPIGAS that is the EPC contractor for the Arctic LNG 2 project, is continuing "to implement an orderly exit from the project," the company said.
In line with applicable sanctions, Technip has "suspended the last majority of the work" on the project, the company said. In the first half of 2022 it excluded about 2 billion euros relating to Arctic LNG 2 from its total adjusted order backlog. This was due to the sanctioned work that has been suspended, and is in line with ongoing orderly exit discussions, Technip said.
The "exit process will likely take several more months due to the contract terms and the inherent size of the project," the company said.
On April 8, the European Union imposed sanctions on Russia which included bans on supply of a number of goods and equipment for LNG production.
In late April, the head of Technip Energies, Arnaud Piton, said that the new sanctions made the implementation of the project "more difficult, if not extremely difficult," but the work had not been suspended. Currently, he said, the company is trying to get clarification on the EU sanctions, which could result in a significant reduction of its participation in the project after the second quarter.
According to the executive, if there are no new sanctions against the LNG sector or Novatek , the company will be able to "complete or partially complete line 1 of the LNG plant," while construction of two more lines will be "extremely difficult." New sanctions, however, could end Technip Energies' participation in the project altogether.
According to the Unified State Register of Legal Entities, in early July Technip Energies transferred its stake in Arctic Energies LLC to NIPIGAZ. This LLC is a resident of the Stolitsa Arktiki (Capital of the Arctic) PDA, which specializes in the construction of residential and non-residential buildings and also oversaw the construction gravity-based structure (GBS) platforms and installation of modules as part of the Arctic LNG 2 project. NIPIGAZ declined to comment, while Technip Energies could not be reached for comment.
The direct EPC contractor for Arctic LNG 2 is NovArctic, which includes Technip, Saipem and NIPIGAZ. The value of the EPC-contract was estimated at $11.2 billion, but the contracts were divided into Russian and foreign segments and executed by two different legal entities with different stakes. It was reported that the value of the foreign portion is $7.6 billion, based on Technip Energies materials, and the leader has 84% in this contract, i.e. $6.4 billion. Technip Energies has a stake of $1.2 billion in the Russian portion. The share in the Russian portion is evenly distributed between the three participants and the contract value is $3.6 billion.
The Arctic LNG 2 project involves the construction of three liquefied natural gas (LNG) production trains, each with a capacity of 6.6 million tons per year - a total of 19.8 million tons/year. Investments in the project were estimated at $21.3 billion. The Utrenneye field is the resource base for the project.
Novatek has a 60% stake in Arctic LNG 2. The remaining shareholders are France's TotalEnergies , China's CNPC and CNOOC, as well as a consortium of Japan's Mitsui and JOGMEC, each with a 10% stake.