Russian energy company Novatek plans to start delivering the foundations for the second stage of its Arctic LNG 2 plant in late July, two sources familiar with the plans told Reuters. This shows that Novatek is pressing ahead with the delayed project despite Western sanctions that have restricted access to technologies and the availability of tankers to carry liquefied natural gas (LNG).
Industry sources had previously reported that Novatek was forced to scale back the $21 billion Arctic LNG 2 after Western sanctions curbed its access to ice-class tankers, and that it would focus instead on developing its project at the ice-free port of Murmansk.
Arctic LNG 2 tentatively began production of LNG on the Gydan peninsula, which juts into the Kara Sea, in December, but has yet to deliver its first LNG cargo. The project had been planned as Russia’s largest such plant with eventual output of 19.8 million metric tons per year of LNG and 1.6 million tons per year of stable gas condensate from three trains.
However, last year the project found itself included in Western sanctions over Russia’s conflict in Ukraine, prompting foreign shareholders to freeze participation and Novatek to issue a force majeure to warn it would not be able to honor contractual obligations. Sanctions are also delaying Russia’s implementation of other gas and petrochemical projects.
Further complicating the project’s development, Chinese engineering firm Wison New Energies said last week it had decided to discontinue all of its ongoing Russian projects, and to immediately and indefinitely stop taking on any new Russian business.
Despite these challenges, one of the sources said that the deliveries of the gravity-based structures (GBS), that form a foundation for the LNG production site, from a plant in the Murmansk region in northern Russia for the second stage of the project would start on July 22-25. Another source confirmed the dates.