An international collaboration behind Russia’s second Arctic LNG project

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Despite the souring climate in East-West relations and Russia’s growing stress on national capacities, some Arctic projects lean on European oil and gas development companies. (Kirill Kudryavtsev/AFP/Getty Images)
Engineers from Italy, France, Germany and Norway are crucial for Novatek and its development of the Arctic LNG 2.

It will be Russia’s second major liquified natural gas project in the remote and inaccessible Arctic. The Arctic LNG 2 is planned built in the shallow waters of the Gulf of Ob, the bay located near the coast of the Kara Sea between the peninsulas of Yamal and Gydan. The project will make Novatek, the Russian natural gas company, one of the world’s biggest producers of LNG. From before, the company runs the Yamal LNG, the project which was officially launched in December 2017.

But Novatek will far from make it alone. Despite the souring climate in East-West relations and Russia’s growing stress on national capacities, the grand Arctic project leans heavily on the leading European oil and gas development companies.

Company leader Leonid Mikhelson does not conceal his comprehensive project cooperation with leading European companies. Foreign firms will provide project services, while Russian companies will do the well drilling, he told Russian news agency TASS.

Multiple agreements signed

In May 2017, Novatek signed a framework agreement with Technip and Linde, the French and German engineering firms. Following Technip’s merger with FMC Technologies in 2017, additional teams of Norwegian and British engineers might be taken on board.

Novatek will use Linde’s technology on natural gas liquefaction for the Arctic project, and has purchased the necessary license from the Germans.

In addition, the Russians are teaming up with the Italian company Saipem for the development of the gravity-based structure (GBS), the installation which is to be based on the seabed on the Ob Gulf. A representative of NIPIGAZ, a partner of Novatek, confirmed to Reuters that the Italians are in the process of getting the job.

Strategic partnership

Saipem and Novatek already in 2016 signed a strategic partnership deal which included «joint exploration of opportunities for mutual cooperation in future LNG projects». Still, the Italians were not included in the LNG Novaengineering («SPG Novoinzhiniring»), the joint venture established in May 2017 to lead the development of the project. In the consortium are Linde, TechnipFMC and NIPIGAZ.

Saipem might also get other key responsibilities. According to Novatek leader Mikhelson, the Italian company might be included as partner in the development of the Kola Yard, the plant on construction of project modules, currently under development outside Murmansk City. Partnership talks over the Kola Yard are in the progress also with two other companies, Mikhelson told TASS.

6,1 million tons of capacity

The Arctic LNG 2 is to be ready for production by early 2023. It will be based on three project trains each with a production capacity of 6,1 million tons. Natural gas resources are based on the nearby Salmanovskoye and Geofizicheskoye fields, and possibly also field like the Gydanskoye, East-Tambey and North-Ob.

The seabed in the area is to be cleaned free of rocks and cracks filled with concrete, Neftegaz informs. Then, subsequently, the gravity-based structure (GBS) will be placed on site. The structure will be built at the Kola Yard and towed across the Barents Sea and Kara Sea to the Gulf of Ob.

The project’s Front End Engineering Design (FEED) is reportedly to be ready by late 2018 and a final investment decision taken before the end of 2019.

With the Arctic LNG 2, Novatek will boost its annual production of LNG to more than 34 million tons. That liquified natural gas will all be shipped out through Northern Sea Route, some of it eastwards to Asian buyers.

Related stories from around the North:

Canada: Arctic nickel, not oil, could soon power the world’s cars, Blog by Mia Bennett, Cryopolitics

Finland: U.S. pullout from Paris climate pact condemned by Finnish leaders, Yle News

Germany: Cheap oil from the Arctic? Fake news, says climate economist Kemfert, blog by Irene Quaile, Deutsche Welle

Norway: Statoil greenlights northernmost drilling project in Arctic Norway, The Independent Barents Observer

Russia: Foreign shipments of oil, natural gas and coal banned along Russia’s Northern Sea Route, The Independent Barents Observer

Sweden: Sweden’s climate minister : U.S. withdrawal from Paris sends a bad signal, Radio Sweden

United States: Big questions emerge over $43 billion gas-export deal between Alaska and China, Alaska Dispatch News

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Atle Staalesen, The Independent Barents Observer

Atle Staalesen, The Independent Barents Observer

For more news from the Barents region visit The Independent Barents Observer.

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