Wison Becomes First Chinese Yard to Quit Russian Market

Chinese LNG specialist Wison New Energies has become the first Chinese shipyard to leave the Russian market, abandoning its lucrative role in Novatek's giant Arctic LNG 2 project. The firm announced its decision in a LinkedIn post last week. 

"Wison New Energies' Board of Directors has decided to discontinue all ongoing Russian projects and will immediately and indefinitely stop taking any new Russian business," the firm said in a statement. "We appreciate the good relationship we have established with our Russian partners in the past and value the work we have done together. However, considering the company's strategic prospects, we have to make this difficult decision"

Wison is one of the world's leading builders of LNG process modules, including complete floating LNG liquefaction plants for offshore production. It was one of several Chinese offshore contractors who won bids to supply process modules for Novatek's Arctic LNG 2 expansion plant on the Gulf of Ob. The core components of the terminal - the liquefaction trains - are being built atop three giant gravity-based structures (GBSs) made of concrete, which will be floated to the site and partially sunk onto permanent resting places alongside the shore. 

The first GBS has already been completed and installed, but work on the second and third trains has been delayed by the withdrawal of Novatek's Western suppliers. Blue-chip companies like Mammoet, Baker Hughes, Saipem, Boskalis, Technip and Linde have all quit, and Novatek has had to attempt to replace these engineering and maritime specialists with less well-known alternatives - and often, to redesign the plant around substituted components. 

The U.S. Treasury has begun sanctioning Novatek's remaining suppliers, starting with JSC Energies, Nova Energies, Singaporean module carrier specialist Red Box, and Abu Dhabi-based Green Energy Solutions. Last week the Treasury also blacklisted Chinese shipbuilder Penglai Jutal Offshore Engineering Heavy Industries (PJOE), one of Wison's peers and a major supplier of process modules for the Arctic LNG 2 project. 

Wison has so far escaped the U.S. government's attention, though it was a major contributor to the plant. As recently as January, four gigantic modules for the Novatek plant's Train 3 were visible in satellite imaging of the Wison yard in China, according to High North News. 

Wison's announcement that it is quitting Russia does not necessarily mean that Novatek will lose a supplier. It is still possible that Wison's contract with Novatek could be fulfilled, under new ownership. In its statement Friday, Wison's board said that it is selling its entire stake in its Zhoushan facility, where the modules for Arctic LNG 2 were being assembled. Wison will no longer have any business connections with the Zhoushan yard. 

Cleared of the risk of a possible U.S. sanctions designation over its activities in Russia, Wison will be free to pursue export contracts with other clients. On the same day as its announcement that it was departing Russia, Wison announced that it had won a $1.2 billion order for an FLNG from Malaysian conglomerate Genting Bhd.