Chinese engineering company Wison New Energies announced on LinkedIn that it has decided to terminate all ongoing projects in Russia and will immediately suspend accepting any new business in Russia indefinitely.
This decision is reported to impact Novatek, Russia’s largest liquefied natural gas producer, and the Arctic LNG 2 project, which involves the construction of gas turbine power plants for a liquefied natural gas facility using equipment from Wison and Harbin Guanghan Gas Turbine Co. Ltd.
In their statement, Wison expressed gratitude for the good relationships built with Russian partners in the past but stated that due to the company’s strategic future, they had to make this difficult decision.
Novatek’s Arctic LNG 2 project, planned to be Russia’s largest liquefied natural gas plant located on the Gydan Peninsula, was expected to have a final annual production capacity of 19.8 million tons of liquefied natural gas and 1.6 million tons of stable natural gas condensate across three production lines.
After the first production line of the Arctic LNG 2 project started operation in December last year, commercial deliveries were planned to begin in the first quarter of this year. However, following the conflict between Russia and Ukraine, the project was included in sanctions by the West, leading to complications and forcing foreign shareholders to freeze their participation. Novatek also issued a force majeure declaration and had to halt production due to sanctions and a shortage of gas and oil tankers.
The decision by Wison to terminate projects in Russia was made public after Russian President Vladimir Putin’s visit to Beijing in May, during which he met with Chinese President Xi Jinping. Both leaders pledged to usher in a “new era” of partnership and announced collaboration on various security issues in opposition to the United States.
According to a report by Nikkei News on May 10, uncertainties have surrounded the future of Russia’s Arctic LNG 2 project as production, while seeming to be operational on some lines, has been unstable, with no progress in shipments. This is believed to be due to the impact of U.S. economic sanctions and difficulties in acquiring transport ships.
Earlier reports, cited by Reuters on April 2, stated that the production at Arctic LNG 2 had been temporarily stopped due to the procurement deadlock of ice-breaking LNG tankers crucial for transporting liquefied gas from Arctic 2, caused by additional sanctions from the Biden administration.
Additionally, a report by The Wall Street Journal on April 16 highlighted that “ultra-cold natural gas has become one of the most critical sources of energy globally, as well as a geopolitical flashpoint, with the U.S. government aiming to completely obliterate Russian President Putin’s new liquefied natural gas project.”
The liquefied gas project, with Novatek investing 60%, also involves the participation of TotalEnergies SE from France, Mitsui & Co. Ltd. from Japan, and the Japan Oil, Gas and Metals National Corporation (JOGMEC), each holding stakes in the project.