Chinese Wison New Energies Ceases Work on Russia’s Arctic LNG 2 Project
LNG modules at the Wison yard. (Source: Wison New Energies)
In a surprise move Wison New Energies announced that it would halt all work with Russia. The company has been a key contributor to Novatek’s Arctic LNG 2 project. Its move could also be an attempt to shield itself from future sanctions, days after another Chinese yard was placed under sanctions by the U.S.
The impacts of the widening U.S. sanctions regime against Russia’s Arctic energy projects continues to ripple through the system.
Wison New Energies Group, a key manufacturer of liquefaction modules for Novatek’s Arctic LNG 2 projects announced that it would discontinue working on Russian projects with immediate effect.
“Wison New Energies' Board of Directors has decided to discontinue all ongoing Russian projects and will immediately and indefinitely stop taking any new Russian business,” the company announced through a social media post.
In what appears to be another blow to Novatek’s efforts to complete the Arctic LNG 2 project, could also reveal itself as a move by Wison to legally distance itself from the company’s division in charge of building the modules.
Wison is parting with its offshore and marine division in Zhoushan. It is here where modules for Novatek’s projects were assembled.v
“At the same time, we have decided to sell our entire equity interest in Zhoushan Wison Offshore & Marine Limited. Wison or any entity of Wison will not have any ownership in the new Zhoushan shareholding,” the statement ensured to clarify. The statement did not elaborate if the Zhoushan yard intends to continue working on modules for Arctic LNG 2 or deliver completed ones under new ownership.
Sanctions hit Chinese yard
Wison’s decision comes less than a week after the U.S. slapped another Chinese shipyard, Penglai Jutal Offshore Engineering Heavy Industries, with sanctions for its continued deliveries of modules to Russia. Wison escaped without designation during the latest round of sanctions despite shipping two key modules for Train 3 of the Arctic LNG 2 project in March 2024.
Chinese vessel Wei Xiao Tian Shi picked up modules 3-TMR-001 and 3-TMR-002 from the Wison yard between March 18-29. The vessel is now days away from rounding the northern tip of Norway en route to Novatek’s Belokamenka assembly yard.
Two additional modules 3-TMR-003 and 3-TMR-004 remain at the yard, satellite images indicate. Red Box’s heavy lift vessel Audax remained offshore the yard for weeks before moving off leading to speculation about the fate of the two remaining modules.
Two Arctic LNG 2 modules (center bottom) remain at the Zhoushan yard on June 19, 2024. (Source: Planet.com)
By separating Wison New Energies from the Zhoushan yard the company could aim to shield itself should sanctions be levied against the module yard in the future.
The announcement ends a decade-long cooperation with Novatek with the company stating that “we appreciate the good relations we have built with our Russian partners in the past and value the work we have done together.”
For Arctic LNG 2 the company completed 12 massive pipe rack modules, weighing a total of 145,000 tons. The pipe racks form the core of each production train.
In trouble without Chinese yards
“Novatek has had to rely on the Chinese yards more than it had originally planned,” explains Ben Seligman, a project specialist for Arctic oil and gas development.
For Train 3 almost all modules were intended to be sourced domestically at the Belokamenka yard using Russian-manufactured equipment.
“Instead, around half of them are being built in China. One would have thought that Novatek could have built the pipe rack modules in Russia as they are pretty simple compared to the more complex modules.
Assuming that this dependence on the Chinese yards was to persist, then the knock-on effects of this Wison decision could be quite serious,” confirms Seligman.
Wison did not respond to requests for comment about the status of the remaining modules at the Zhoushan yard.
