Bloomberg: production comes to halt at Novatek's Arctic LNG 2
The gas production platforms in the remote Gydan Peninsula risk turning into rusting ghost installations as Novatek is forced to shut down its sanctions-ridden Arctic LNG 2.
According to Bloomberg (paywall), Novatek has halted LNG production at the remote Gydan Peninsula. The storage facilities on site are completely full and there is no way for the company to transport the liquified natural gas to the market, anonymous sources say to the news agency.
The production halt comes only about two months after a huge 640,000 ton heavy production unit was towed up the shallow waters of the Ob Bay to the production site in Utrenny. On 17 of August, the more than 110 meter high object reached its destination after almost a month of towing from Belokamenka, Kola Peninsula.
The gravity-based structure that can produce up to 6,6 million tons of LNG per year docked next to the similar structure that was sent from Murmansk to Gydan in August 2023.
The structures are key components in Novatek’s Arctic LNG 2 project, and a third unit of the kind is planned for 2025. In a normal situation, Novatek would be able to produce almost 20 million tons of LNG per year in the remote Arctic project. All of it would be exported by a new fleet of advanced ice-class tankers through the Northern Sea Route and to buyers across the world.
However, Moscow's war of aggression in Ukraine and the subsequent introduction of massive international sanctions have seriously hampered the Russian plans, and the production platforms and adjacent infrastructure at Utrenny now risk turning into rusting ghost installations.
The project that was to make Russia one of the world’s leading producers of LNG is now paralysed and the production platforms in Utrenneye might never be able to reach their production targets.
The same applies for the Saam, a 400 meter long vessel projected to serve as transshipment hub for the project. The fate is also uncertain for Belokamenka, the LNG construction center outside Murmansk.
During this year's ice-free summer season, Novatek has applied a shadow fleet owned and managed by dubious business interests. Among the gas carriers that covertly have served the Arctic LNG 2 this summer is the Everest Energy, a 277 meter long former Norwegian ship.
As Arctic sea-ice now quickly covers the far northern waters, Novatek will need to apply advanced ice-class carriers for the operations. That kind of ships, however, are not available in the market.
