Six sanctions-stranded, specialised Arc7 LNG carrier newbuildings contracted for Russian business are coming under increasing international scrutiny as the shipyard and contracting parties move to try and affect their deliveries.
A first newbuilding, the 172,600-cbm Pyotr Kapitsa — one of three vessels originally contracted by Russian shipowner Sovcomflot but later cancelled by then shipbuilder Daewoo Shipbuilding & Marine Engineering now Hanwha Ocean — appears to have changed ownership.
Several reports have highlighted that as of 1 February, the vessel’s owner and manager in the Equasis database has been switched to Dubai-based company New Transshipment FZE from Hull No 2514.
This is prompting speculation that the ship, which was ordered to serve the US-sanctioned, Novatek-led Arctic LNG 2 project in Russia, could soon be released for delivery.
The other two Arc7s from the original three sister ships — the Lev Landau and Zhores Alferov — were listed under Russian energy company Novatek’s ownership but have been switched to Hanwha Ocean.
But those following the vessels told TradeWinds that an export license still needs to be acquired for the ships.
They also point to legal action in Singapore, which has been ongoing.
Hanwha Ocean announced a year ago that Russian clients had filed an arbitration with the Singapore International Arbitration Center, claiming damages worth over $877m after the shipbuilder cancelled the contracts on the three vessels.
Key equipment providers for the ships were unable to supply kit for the vessels under the international sanctions and Hanwha Ocean also blamed the Russian parties for not making payments on the ships.
Novatek is trying to gear up the first production train of its new Arctic-based LNG project for exports. But progress has been delayed by a barrage of international sanctions.
These have also hit the 21-vessel ice-breaking shipping fleet it had lined up for the project.
Aside from the three under-construction, former Sovcomflot vessels at Hanwha Ocean, Japanese shipowner Mitsui OSK Lines is also building another Arc7 trio for the Novatek project.
Challenges and complications
Speaking in India last week, MOL president and chief executive Takeshi Hashimoto was asked about its three vessels.
“Our contractual obligation is that if we cannot provide the service to Arctic 2, we have to sell our vessel to Arctic 2,” Hashimoto said. But he added: “There is a sanction that says we should not do that deal with Arctic. So it’s a bit complicated.”
Novatek, which teamed with Sovcomflot under joint venture Smart LNG, lined up a further 15 vessels for its Arctic LNG 2 project. These vessels were to be built at Russia’s Zvezda Shipbuilding Complex, with assistance from Samsung Heavy Industries (SHI).
However, the relationship with SHI stalled as sanctions toughened.
Just five hulls have been delivered to Zvezda. SHI has clarified that it has “ceased its fulfillment” on the contract covering the remaining 10 vessels.
The first of these five — the Sovcomflot-ordered, 172,600-cbm Alexey Kosygin — was named at Zvezda in September with Russian President Vladimir Putin attending the event. The vessel was originally due to go into operation in mid-2023 to lift the first volumes from the Arctic LNG 2 plant. But remains at the yard.
Novatek has started production on the first of three gravity-based liquefaction units, with a capacity of 6.6 million tonnes per annum, for the Arctic LNG 2 project located on the Gydan Peninsula. However, the Russian gas company, which also controls the Yamal LNG plant, sent force majeure notices to its major buyers as exports were delayed.
The US has sanctioned the Arctic LNG 2 project along with the two giant floating storage units — the 361,600-cbm Saam FSU and Koryak FSU — which were put into place in Ura Bay off Murmansk and Bechevinskaya Bay off Kamchatka Peninsula, at either end of the Northern Sea Route to serve the project.
