20 Oct 2022 14:41

Technip Energies to exit Arctic LNG 2 project in H1 2023, has demobilized personnel

MOSCOW. Oct 20 (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, continues its orderly exit from the project and has demobilized all operational personnel.

"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," the company said in a Q3 report.

Technip said in July that in line with applicable EU sanctions it had "suspended the last majority of the work" on the project. The "exit process will likely take several more months due to the contract terms and the inherent size of the project," the company said at the time.

The EU on April 8 imposed sanctions on Russia which included bans on supply of a number of goods and equipment for LNG production.

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.

NIPIGAZ will now remain the only Arctic LNG 2 EPC contractor.

The Arctic LNG 2 project involves the construction of three liquefied natural gas production trains, each with a capacity of 6.6 million tonnes or a total of 19.8 million tonnes per 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 the Japan Arctic LNG B.V. consortium of Mitsui and JOGMEC, each with a 10% stake.

Despite the departure of the foreign subcontractors, Novatek is so far confirming the project's first train will launch in 2023, second in 2024 and third in 2026.