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Novatek, Russia’s largest independent gas producer and a major developer of liquefied natural gas (LNG) in the Arctic, is transferring operations from a European partner to a new company in the United Arab Emirates (UAE).
According to industry reports, Novatek wants a new Emirati company, Green Energy Solutions, to secure the technology its former Western partners intend to provide.
Some Western companies, including Technip in France, Saipem in Italy, Baker Hughes in the United States, Withdrawal from Novatek’s Arctic project due to Western sanctions.
Economic sanctions imposed after Russia’s invasion of Ukraine Has a profound impact on Novatek’s operations.
While imports of Russian LNG into the EU are still allowed, financing and exports of key technologies for building new LNG projects, including those in the Arctic, have been banned.
Therefore, Novatek is looking for new international partners Outside the scope of EU sanctions to secure Western technology needed to complete the Arctic LNG 2 project.
According to industry publications Intelligence OnlineNovatek employees at the central construction yard near Murmansk were told that all matters related to technology previously provided by Technip and Saipem were now handled through the UAE company.
“Green Energy Solutions is a resident of the UAE and therefore not subject to EU sanctions, and it can source and supply equipment for projects,” explained Alexander Kukuev, a partner at a Moscow law firm specializing in international business and corporate law.
Arctic project despite sanctions
Novatek’s flagship Arctic LNG 2 project, consisting of 3 trains, is facing major delays due to Western sanctions.
According to the company, The first production line will not open before the end of 2023 At the earliest, a year later than originally planned. The fate of the other two lines remains uncertain.
In recent months, Novatek has announced an attempt to redesign the liquefaction process where possible.
it Contract with Turkey’s floating power plant That way it can use the limited number of dedicated turbines it received before the sanctions came into effect for liquefied natural gas rather than power generation.
However, industry experts doubt whether these efforts will be enough to complete a second or third line.
Novatek’s own natural gas liquefaction method, which relies primarily on technology within Russia, is called “arctic waterfall,” is said to have been unsuccessful.
2021 The company cancels an attempt to use it in its Ob LNG project It said it would instead rely on German company Linde to procure the compressors and other equipment it needs.
Working with the newly formed UAE company, Novatek aims to bypass the sanctions regime and procure much-needed technology in a low-key manner.
Green Energy Solutions Project Management Services, a newly established UAE company, was newly registered in Abu Dhabi in June and emerged as an engineering, project management and construction consultancy.
At the same time, Novatek also Start hiring For an unspecified business located in the UAE, including chief accountant and project manager.
“It is worth noting that the entity was established in Abu Dhabi, not Dubai. This suggests that it has the endorsement or sponsorship of the local elite. At least this is driven by the local elite, possibly with Al Nahyan [President of the UAE] Recognition, as this is a strategic asset that requires approval,” explains Andreas King, professor and research fellow at King’s College London.
closer ties
The UAE has a closer relationship with Russia’s Novatek, following several cooperation and investments between the two countries. UAE sovereign wealth fund Mubadala has invested part of its portfolio in the Russian Direct Investment Fund.
In December 2021, Mubadala also Acquired 1.9% stake in SIBURa Russian petrochemical company partly owned by Novatek Group CEO and Chairman of the Board.
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