Race against time and the coronavirus in Novatek's Arctic projects

The spreading of the coronavirus will not affect progress in the grand LNG projects currently under development in the Arctic, Russian natural gas company Novatek makes clear. The assurances made by company deputy board chairman Mark Gyetvay during a telephone conference this week comes amid a dramatic increase in the number of virus-infected workers at the company’s key construction sites.

Virus hotbeds

Regional authorities in Murmansk now say that up to 2,000 workers at the Belokamenka yard are infected with the coronavirus. That is almost 20 percent of the 11,000 work force currently involved in the construction of the Kola Yard, the plant that will build LNG platforms for Novatek’s upcoming natural gas projects in the Arctic.

At the same time, authorities in the Yamal-Nenets region confirm that almost 700 workers have contracted the virus. A significant number of them are engaged in Novatek’s activities in Sabetta and nearby Gydan Peninsula.

And the number of COVID-19 cases continues to grow dramatically. In Belokamenka, almost 200 new cases were registered in the course of the last day. In Yamal, additional 105 cases were announced on the 6th May, TASS reports.

Both in Murmansk and Yamal-Nenets, an overwhelming majority of the project construction workers are commuters that are flied in-and-out to build and follow up the Belokamenka yard and the Yamal LNG, as well as the Arctic LNG 2 in Gydan.

Time trouble

Novatek is in a major time squeeze to meet project deadlines. The Belokamenka yard is site for the manufacturing of gravity-based structures for production of LNG in the company’s Arctic LNG 2.

When ready, three floating structures will be towed several thousand kilometers to the Gydan Peninsula, where they will be anchored up on the shore of the Ob Bay and ultimately produce as much as 19,8 million tons of LNG per year.

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That must happen in due time before the Arctic LNG 2’s scheduled launch in 2023.

No time for virus

Until now, Novatek has impressed the world’s petroleum industry with its efficiency and ability to build vast plants in some of the most desolated parts of the world. The company’s current flagship project, the Yamal LNG, was completed a year ahead of schedule.

The same kind of progress could be far more tricky in the Arctic LNG 2.

Novatek started large-scale construction works in Gydan in summer of 2018 and a series of ships loaded with building materials have since been sent into the shallow waters of the Ob Bay to the project’s Utrenneye seaport. The last shipment was made with nuclear-powered cargo ship “Sevmorput” in March this  year.

The major outbreak of COVID-19 at the construction sites now threatens Novatek’s operations. However, the company makes clear that it in no way is willing to halt activities neither in Murmansk, nor in the Yamal region. That was repeated by deputy board chairman Gyetvay this week.

“This outbreak will not affect construction works on site, nor the successive development of the Arctic LNG-2,” Gyetvay told TASS.

Northern Sea Route

A delay in Novatek’s Arctic projects will have implications not not only for the company’s commercial operations. It will also have significant political implications. The company is a key player in the Kremlin’s much-promoted development of the Northern Sea Route.

The decrees issued by Vladimir Putin in spring 2018 includes an objective to increase cargo flows on Russian Arctic shipping route to 80 million tons by year 2024. The liquified natural gas produced by Novatek constitutes a key share of that cargo.

Big LNG

Liquified Natural Gas is the main commodity currently produced in the Russian Arctic and a key share of infrastructure developments in the region are made to facilitate Novatek’s operations.

However, not everything has proceeded smoothly for Novatek lately. Despite it major success in the Yamal LNG and its ongoing big construction works in Gydan, the company has faced significant problems with its fourth and last train of the Yamal LNG.

The plant was originally scheduled to open in December 2019. Now, the company deputy board chairman Gyetvay says the plant will not be ready before “late 2020”.

The Yamal LNG 4th train is believed to have a production capacity of about one million tons per year.

The reason for the delay is reported to be technical problems with the pipelines that are not designed for the extreme low temperatures in the area. While the first three Yamal LNG trains are designed and delivered by foreign companies, the fourth train is based on Russian designs and technology. It is Russian company NIPIGAZ that was behind the ill planning of the pipelines.

Ob LNG

Novatek is also reporting a postponement of its Ob LNG, a smaller project to be developed in Yamal, not far from Sabetta.

Like the Yamal LNG’s 4th train, the Ob LNG will be build exclusively with Russian-made technology.