South Korean yard cancels order on Russian Arctic tanker

The carrier is the first in a series of three vessels ordered by Russian shipping company Sovcomflot.

In a stock exchange filing, South Korean shipbuilder informs that the customer has failed to make an installment payment on a contract that it received in October 2020, iShipNet informs.

The vessel is worth $270 million and is part of a larger $800 million order. Unless the Russian customer meets its payments requirements, the Deawoo Shipbuilding would ultimately have to cancel also the second and third vessel.

The powerful carriers are to be built for the Arctic LNG 2, the major liquified natural gas project on the far northern Gydan Peninsula. They are based on a unique ship design developed by Finnish firm Aker Arctic, enabling year-round shipping through the most icy parts of the Northern Sea Route.

In addition to the three carriers ordered by Sovcomflot, another three similar ships were ordered by Mitsui O.S.K. Lines. The carriers were to become part of a major fleet serving the Arctic LNG 2 project.

The situation follows Russia’s war against Ukraine and the major sanction regime imposed on Russia by the international society.

The EU’s 5th sanctions package bans exports to Russia of key industry components and companies like Linde are suspending its business development activities in Russia.

The sanctions now threaten to paralyse Novatek’s major industrial projects in the Arctic.

The Daewoo Shipbuilding is a key partner for Novatek in several of the company’s Arctic projects. The Koreans are also to build Novatek’s floating LNG storages facilities near Murmansk.

A deal worth $748.2 million was signed by Daewoo and the Russian State Transport Leasing Company in June 2020. It includes the building of two 380,000 cubic meters big floating storages. When ready, one was to be towed to a projected LNG terminal site in Vidyaevo on the Barents Sea coast and another to Kamchatka on Russia’s far eastern coast.