France's Total says know-how for Russian Arctic LNG-2 to slash costs

FILE PHOTO: The logo of French oil giant Total is seen on a flag at La Defense business and financial district in Courbevoie near Paris, France. May 16, 2018. REUTERS/Charles Platiau

ST PETERSBURG (Reuters) - Russia’s Arctic LNG-2 project will be around a third cheaper to build than the country’s Yamal LNG plant thanks to technology being built by Italy’s Saipem, stakeholder Total said on Tuesday.

Arnaud Le Foll, Total’s head officer in Russia, said Saipem was building so-called gravity-based structure platforms (GBS) for gas liquefaction for the Arctic plant. GBS platforms have been used often in North Sea and other gas projects but not in Russia.

“There will be three such structures,” Le Foll told Reuters on the sidelines of a conference in St Petersburg. “They are being built in Murmansk by Novatek’s shipyard, it’s contracted with (Italy’s) Saipem.”

Russian natural gas producer Novatek owns a 70% stake in the Arctic project, while Total and China’s CNPC and CNOOC each own 10%.

The GBS platforms will be located near the Arctic Ocean coast and held in place on the seabed by ballasts.

Novatek has estimated that the project will cost $20 billion-$21 billion, whereas the Yamal plant, operating since December 2017, cost $27 billion (21 billion pounds). The plant in the Arctic Gydan peninsula is due to start operations in 2022-2023, with a total annual capacity for 19.8 million tonnes of LNG, the largest such plant in Russia.

Novatek and Total were also in the consortium that built the Yamal plant.

“We are targeting the project that will be more economic by 20% to 30% comparing to Yamal,” Le Foll said, when asked how the GBS technologies will impact the costs of Arctic LNG-2.

He declined to comment on Total’s exposure to contaminated Russian oil discovered two months ago. Total actively trades Russia-sourced oil.

Reporting by Vladimir Soldatkin; Editing by Susan Fenton