American engineers exit Russia, leaving Arctic LNG projects in doubt

Baker Hughes will not longer provide engineering services and equipment in Russia, a move that could stall Novatek's Arctic LNG 2 project.

By Atle Staalesen, The Independent Barents Observer - June 17, 2022
A participant walks past a stand of Russian gas producer Novatek during the Russian Energy Week International Forum in Moscow, Russia on October 13, 2021. (Maxim Shemetov / Reuters File Photo)

U.S oil service company Baker Hughes will no longer provide engineering services to Russian LNG developers.

That creates another serious headache for Novatek’s LNG projects in the Arctic. According to newspaper Kommersant, Baker Hughes will also stop deliveries of equipment to Russia.

Baker Hughes plays a key role in several of the new natural gas projects that over the past years have been developed in the Russian Arctic. Without the services and equipment provided by the company, projects like the Yamal LNG and the Arctic LNG 2 could soon run into trouble.

According to Kommersant, Novatek will not be able to get needed spare parts to the Yamal LNG, and the construction of the first train of the Arctic LNG 2 project might not be completed. The former project was launched in 2017 and now produces about 20 million tons of LNG per year. The latter is to be launched in 2023 and project to produce 198 million tons by 2026.

People associated with the Russian natural gas industry now question the future of all projects dependent of foreign equipment.

Novatek owner and CEO Leonid Mikhelson has previously stated that operations are “complicated” by international sanctions and that he no longer can confirm formerly adopted timelines for projects such as the Arctic LNG 2.

The first train of the grand LNG project was original due to come into production in 2023. The floating gravity structure that is built at the Belokamenka yard outside Murmansk is believed to 98 percent completed and the plan has been to tow it to the production site in Gydan in 2022.

However, without the services and equipment from Baker Hughes that is unlikely to happen. The U.S company delivers turbines to the project, and Novatek has reportedly installed only about half of the seven turbines needed.

On May 25, a heavy loads ship delivered what is believed to have been the last major piece of western technology to the project.

The decision by Baker Hughes comes as a result of Russia’s bloody war against Ukraine. It complements the international sanctions regime introduced against the aggressor country.

The halt in services and equipment from Baker Hughes follow similar decisions from several more companies like Siemens and Linde.