Technip Energies signs deal to leave Arctic LNG 2 project

The French oil and gas services provider expects to exit the project in the first half of 2023.

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A concrete gravity-based structure (GBS) of Arctic LNG 2 joint venture is seen under construction in a dry dock of the LNG Construction center near the settlement of Belokamenka, in Russia’s Murmansk region on July 26, 2022. (Reuters Stringer)

Technip Energies expects to fully exit the liquefied natural gas project Arctic LNG 2 led by Moscow-listed gas producer Novatek next year, the French oil and gas services provider said on Thursday.

The group, which said in March it was renouncing new business opportunities in Russia, had expected Western sanctions enacted against Russia after its invasion of Ukraine to reduce the company’s involvement in Arctic LNG 2.

“We have signed an Exit Framework Agreement with our customer (…) and anticipate completing this process within the first half of 2023,” Chief Executive Officer Arnaud Pieton said in an earnings statement.

The company declined to provide details on the parties involved in the deal.

Shares in Technip Energies were down 2.6 percent around midday.

Finance chief Bruno Vibert told reporters in a call that the project’s revenue contribution would be greatly reduced in the second half of the year and the next.

Before Russia’s invasion of Ukraine, Arctic LNG 2 was set to be launched in 2023 and reach full production capacity of almost 20 million tonnes of LNG a year in 2026.

The stock of Technip Energies, which specializes in engineering and technology for the energy industry, has recovered much of the ground lost in the immediate aftermath of the invasion, when the shares halved in value in just ten days.

As the European Union braces for a tighter squeeze in Russian gas supply, Pieton pointed to the “urgent need” to invest in LNG and low-to-zero carbon solutions.

“We expect a significant improvement in order intake trends over the next 12-18 months,” he said.

Including the expected contribution from Arctic LNG 2, Technip Energies forecast full-year revenue of 6.2-6.5 billion euros ($6.1-$6.3 billion) and a recurring core margin of 6.7 percent to 6.9 percent.

Its adjusted revenue in the third quarter amounted to 1.60 billion euros, against 1.67 billion a year earlier.