Save for later Print Download Share LinkedIn Twitter With EU sanctions closing off access to foreign technology, Novatek will intensify efforts to scale up its own Arctic Cascade liquefaction process to support the drive to turn Russia into one of the biggest LNG exporters on the planet. As sanctions hit its 19.8 million ton per year Arctic LNG 2 project, the privately owned but Kremlin-backed firm intends to use Arctic Cascade for a new 5 million ton/yr plant to make it less vulnerable to Russia’s growing technological and financial isolation.Revealing the plans last week, CEO Leonid Mikhelson said the plant, now at the pre-design stage, will have two 2.5 million ton/yr trains. That's short of the 13.2 million tons/yr that could be lost if Arctic LNG 2's second and third trains are late opening, or never open. The first 6.6 million ton/yr train is almost finished, so looks likely to start up on time in 2023. The second train is scheduled for 2024 and the third for 2025. Novatek has licenses from Germany's Linde for 12 trains, including the three at Arctic LNG 2. But Linde said in March it would suspend new Russian projects and the wind-down period for EU sanctions expired on May 27. Linde's involvement in Arctic LNG 2 is now over, depriving Russia of large-scale liquefaction technology. Novatek is using Arctic Cascade on a small scale at Yamal LNG's 900,000 ton/yr Train 4, which had trouble starting up. It talked of scaling up the technology for Obsky LNG, but that project was scrapped. After complaining about the quality of domestically produced equipment, the company now has no choice but to intensify cooperation with Russian manufacturers, encouraged by the Kremlin.Sticking to Its LNG GunsDespite the problems, Deputy Prime Minister Alexander Novak said last week the country will for now stick to its target of boosting LNG capacity to up to 140 million tons/yr by 2035 from around 30 million tons in 2021. Novatek has said it wants to produce up to 70 million tons/yr by 2030, up from Yamal LNG's 19.6 million tons last year.Like Arctic LNG , the as-yet unnamed plant will be built on offshore concrete gravity-based structures (GBS). That should guarantee work and jobs at the Novatek Murmansk yard in Belokamenka, in the northwest, particularly if Arctic LNG 2’s second and third trains don't go ahead. The first two docks at the yard, designed to build GBS platforms and assemble trains before transport to the West Siberian Arctic, are now constructing platforms for the first two Arctic LNG 2 trains. Construction of the third can only begin once the first moves to the plant site at the Arctic port of Sabetta. Scheduled for summer, this might be delayed by financing difficulties.Novatek hopes foreign partners will continue to cooperate without breaching sanctions and won't self-sanction under pressure from their governments. According to Mikhelson, “the partners do not want to go. They must comply with sanctions, but still we work together.”Exodus ContinuesStill, the company has been hit by the exodus from Russia of investors, lenders and technology partners. TotalEnergies and the Japan Arctic LNG consortium of Mitsui and Jogmec are halting new investment in Arctic LNG 2, while restricted access to foreign capital markets is forcing Novatek to seek more domestic funding and tax incentives. Linde has gone, while EU sanctions have reportedly prompted several Chinese yards to halt the fabrication of Arctic LNG 2 modules.Plans to build 21 Arc7 ice-class tankers for Arctic LNG 2 — 15 at Russia's Zvezda shipyard and six in South Korea — are also in doubt. South Korea’s Daewoo Shipbuilding and Marine Engineering canceled one of its six orders last week and might cancel another two. These tankers were ordered by Russian shipowner Sovcomflot, which is allegedly in financial difficulties. If Samsung Heavy Industries pulls out of its partnership with Zvezda, the Russian shipyard will find it almost impossible to fulfill the 15-vessel order. Russian Deputy Prime Minister Yuri Borisov was quoted as saying some Korean partners have quit projects with Zvezda, but did not name them. Other partners are Hyundai Samho Heavy Industries, which cooperates in building oil tankers.