Saipem in talks to exit Novatek’s Arctic LNG 2 project

Italian contractor Saipem confirmed it is in talks to pull out of two EPC contracts related to Novatek’s Arctic LNG 2 export project currently under construction in Russia.

The Arctic LNG 2 project located on the Gydan peninsula includes the construction of three LNG trains with a capacity of 6.6 mtpa, each, using gravity-based structure platforms.

Novatek receives modules from China and installs them on the GBS at its construction yard in Belokamenka in Murmansk. The project’s contractors include Technip Energies, Saipem, and Nipigaz.

However, since the start of the Russia-Ukraine war in February and the introduction of Western sanctions on Russian firms, many companies are withdrawing from Russia.

Technip Energies said in July it continues to implement an “orderly exit” from the Arctic LNG 2 project.

On the other side, Saipem is working on two EPC contracts for the Arctic LNG 2 project.

The first contract is a joint venture with Turkey’s Ronesans related to the GBS work, while the second is for Arctic LNG 2 topside facilities in JV with Technip Energies, according to Saipem’s interim financial report.

Saipem’s backlog in Russia consists only of these two contracts, amounting to about 1.46 billion euros ($1.49 billion).

“For both projects, negotiations are underway with the client for the closure of the relevant activities, in line and in full compliance with the necessary authorizations and timeframes required by the EU regulations,” Saipem said in the report.

According to Russian media reports, Novatek intends to replace Saipem and Technip Energies with two new contractors.

These are Nova energies, controlled by Nipigaz, and Green Energy Solutions, registered in the UAE, the reports said.

Novatek is the LNG project’s operator with a 60 percent stake, France’s TotalEnergies owns 10 percent while CNPC and CNOOC of China have 10 percent, each.

Japan Arctic LNG, a consortium of Mitsui & Co and Jogmec, owns a 10 percent stake in the project as well.

The Russian LNG producer previously expected to launch the first Arctic 2 LNG train in 2023, followed by the second and the third unit in 2024 and 2025, respectfully.

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