McDermott wins contract for Arctic LNG 2 project in Russia

Engineering services firm McDermott International has won a contract to help deliver a major liquefied natural gas (LNG) project in Russia.

The Arctic LNG 2 development in the Gydan Peninsula of West Siberia, operated by Russia’s second-largest LNG producer Novatek, will have capacity to produce 19.8million tonnes per year once complete.

Qingdao McDermott Wuchuan Offshore Engineering (QMW), McDermott’s joint venture with China Shipbuilding Industry Corporation, has been awarded work to provide three complex modules for the project.

McDermott didn’t give a value for the contract but said it defined a “large” award as being between £40.2m – £201.4m, which only accounts for its share of the joint venture.

Fabrication of the modules will take place at QMW’s 111-acre yard in Qingdao, China, due to begin at the end of this year and completed in mid-2022.

The firm said the award recognises “excellent” work carried out earlier on the Yamal LNG project in the Russian Arctic.

McDermott’s senior vice president Asia Pacific, Ian Prescott, added:  “It is further evidence that QMW is a tier one module fabricator in the LNG market.

“Fabrication will be completed in QMW’s mega module workshop which provides increased certainty for safety, schedule and successful project delivery.”

Arctic LNG 2 will will consist of three LNG trains with a capacity of 6.6milllion tonnes per year, which will be installed on three gravity-based structure platforms.

A final investment decision was made earlier this month.

In July, a consortium led by TechnipFMC won a contract worth £6.1bn for engineering, procurement and construction of the giant project.

Production from the project will be delivered to international markets in Europe and Asia by a fleet of ice-class LNG carriers.

It is expected to export its first LNG cargo by 2023, with the second and third trains to start up by 2024 and 2026 respectively.

Novatek owns 60% of the project, along with partners Total (10%), CNOOC (10%), CNPC (10%) and Japan Arctic LNG (10%).

Total owns 11.6% of Novatek itself which therefore takes its overall stake in Arctic LNG 2 to 21.6%.

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