French membrane containment system designer GTT has received notice from a contractor it is working with on the three gravity-based structures for Russia’s Arctic LNG 2 project of that company’s intention to cancel the contract.
Speaking on a second-quarter results call GTT chief financial officer Virginie Aubagnac said Saren, which is a joint venture between Saipem and Ronesans, notified GTT in July of its intention to terminate the contract.
She detailed that GTT’s revenue exposure to the GBS business is €13m ($13.28m), of which €3m is due to be recognised in 2022.
The company said: “GTT is investigating solutions to ensure the proper implementation and integrity of its technology, in strict compliance with applicable international sanctions.”
Explaining the company’s statement on the project to TradeWinds, GTT chairman and chief executive Philippe Berterottiere told TradeWinds said the first GBS unit, which is being constructed at Murmansk, is almost fully completed but has yet to be delivered to the site.
He said if the contract is terminated GTT wants to ensure that the tank membrane system for the unit is safe and will not be degraded.
Berterottiere said GTT had only been told of the intention to cancel the contract recently and the picture is not yet clear.
He said the company expects to hear more on the business in the next one to two months.
Russian energy company Novatek, which is leading Arctic LNG 2, has already said the project will be delayed.
The modules for the other two GBS, which will house the project's liquefaction units, remain in China where they were being built.
GTT has a total of €129m worth of revenue exposure to Russian contracts, €31m of which is due to be recognised in 2022.
Breaking down the figures Aubagnac said that of the 15 Arc7 ice-breaking LNG carriers ordered at the Zvezda Shipbuilding Complex in Russia GTT’s revenue exposure is €78m by 2025 of which €11m is due in 2022.
In addition, GTT is engaged in contracts for a further six Arc7 LNG carriers at Asian shipyards along with two large-sized LNG floating storage units planned for the Northern Sea Route.
Asian yards are also building a further eight conventional LNG carriers contracted by international owners for Russian business.
The CFO said the company’s revenue exposure on these is €38m by 2023 of which €17m is due to be realised in 2022.
In March GTT listed its exposure to Russian contracts at €157m.
