Exit of Chinese Yard Stops Work at Russia’s Arctic LNG 2, Murmansk LNG Delayed Indefinitely

By Malte Humpert (gCaptain) –

The U.S. sanctions regime continues to curtail Russia’s flagship LNG project. 

Days after Chinese company Wison New Energies recalled two modules destined for the Arctic LNG 2 project over fear of sanctions, work on the project looks set to stop.

Wison confirmed the return of modules 3-TMR-001 and 3-TMR-002 to its Zhoushan shipyard. The two modules would have formed the core of the third production line of Arctic LNG 2. Chinese heavy lift vessel Wei Xiao Tian Shi is expected to return to China with its cargo by the end of August. 

Sources at the Belokamenka yard confirmed to gCaptain that construction on the massive gravity based platform (GBS) housing the modules has ceased and several hundred workers are preparing to depart from the site.

Meanwhile, work on Train 2 is largely complete as GBS-2 is being readied for float out and tow to the Gydan peninsula around July 21st sources confirm. 

After the launch of GBS-2 major construction activity at Belokamenka will likely grind to a halt. It is understood that Novatek, Russia’s largest LNG producer, intends to mothball GBS-3 until it can determine a path forward now that Chinese fabrication and delivery of at least some modules has ceased.

Wison announced its exit from all Russia-related work in mid-June.

“Sanctions are a real concern and we are seeing a lot of Chinese companies treading very carefully,” says Jason Feer is the Global Head of Business Intelligence at Poten & Partners. 

“Chinese firms are a lot more careful as they know that U.S. sanctions could harm their businesses by keeping them out of U.S. and European markets.” 

Wison secured a $1bn deal with Malaysia’s Genting for a FLNG days after announcing its exit from Russia.

Novatek’s decision to freeze Train 3 will limit Arctic LNG 2 to 13.2 mta, compared to the design capacity of 19.8 mta. And even reaching that reduced volume will prove very challenging industry experts agree. The lack of a full complement of Baker Hughes turbines required redesigns of Train 1 and 2. Much needed ice-capable LNG carriers remain in short supply and blocked by sanctions. 

The first production line, towed from Belokamenka to the Gydan peninsula, in August 2023, has yet to produce any LNG for export. Following sanctions against the project no LNG carriers have called at the terminal, though the first deliveries are widely expected this summer. 

Wison’s decision also affects the future of Novatek’s next project, Murmansk LNG. The 20 mta facility to be located in the more easily accessible ice-free waters near Murmansk had been greenlit by Mr Putin last year. 

According to people familiar with Novatek’s operations, planning for Murmansk LNG has been halted indefinitely. 

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up