COVID-19 pandemic drove Novatek to bring LNG transfers back to Norway

The pandemic and associated travel restrictions have meant the company couldn't hire the necessary international specialists.

By Malte Humpert, High North News - April 2, 2020
Two Arc7 LNG tankers at anchor in the Sarnesfjord in March 2019. (Courtesy of Kjell-Bendik Pedersen via High North News)

The coronavirus pandemic is forcing Novatek to return to Norway for the transfer of LNG from Yamal, rather than using its new Russian location off Kildin Island.

After last year’s ship-to-ship transfers of liquefied natural gas off Norway’s Nordkapp region, Novatek intended to conduct future reloading operations in Russian waters. The company cited significant pressure from the West as the reason behind abandoning the location near Honningsvåg in favor of a new anchorage in Russia. However, with the recent outbreak of the Coronavirus pandemic the company is now forced to return to Norway on short notice.

[Novatek and Tschudi Group return to Norway’s Honningsvåg to transfer LNG]

While Novatek managed to finish construction of the new anchorage to the north of Murmansk, it is now unable to hire the needed international specialist to operate ship-to-ship transfers as Russia has restricted the entry of foreign nationals in light of COVID-19.

“That’s why temporary transshipment in Norway’s waters is a safer and more reasonable decision,” explained Novatek according to Reuters.

The reloading helps Novatek to reduce the costs associated with operating its expensive Arctic carriers favoring instead transferring LNG onto more efficient conventional tankers once outside Russia’s ice-covered Arctic waters.

Returning to Norway despite Western pressure

Between late 2018 and mid-2019 Russian natural gas giant Novatek and Norway’s Tschudi shipping company partnered to transfer 123 loads of liquefied natural gas in the waters of Norway’s Nordkapp region. After the conclusion of the operation the company announced plans to utilize a new location  near Kildin Island near Murmansk.

Novatek’s original decision to abandon the transshipments near Honningsvåg came as the result of significant “Western pressure,” company officials explained.

Norway also faced significant criticism from the United States last year for playing host to the transfer of Russian natural gas “undercutting Europe’s energy diversification efforts.”

Operation is starting on short notice

The impact of the Covid-19 pandemic required a quick change of plans on the part of Novatek, once again partnering with Tschudi. Norway’s Tschudi shipping company submitted a notice to the Norwegian Coastal Administration about planned ship-to-ship operations on February 28. Just four weeks later the first LNG tankers have arrived back in the Sarnesfjord near Honningsvåg.

As of April 1, the Arc 7 LNG carrier Vladimir Vize and the conventional tanker Yamal Spirit were anchored side by side and engaged in the transfer of LNG.

A further four ships are currently en route and scheduled to arrive in the next two weeks. The ice-capable Arc7 Boris Davydov and the Christophe de Margerie departed the Yamal port of Sabetta, while the conventional LNG tankers the LNG Dubhe, and Clean Planet are headed for Honningsvåg from central Europe.

This year’s operation appears more limited in scope and is expected to last until the end of May based on documents submitted by Tschudi. At that time Arctic sea ice is likely to have receded far enough to allow conventional tankers to travel all the way to Sabetta negating the need for transshipment in Norway.