Frenchmen keep up pressure in Yamal

French energy companies expand activities in Yamal despite growing east-west tensions.

Developments in Ukraine could result in delays in the Yamal LNG project, leader of French oil company Total admits. At the same time, leading French engineering company Technip announces the landing of a major new contract in the grand Arctic project.


According to Christophe de Margerie, CEO of Total, the Ukraine crisis could ”slightly affect” the Yamal LNG project as a number of European banks turn negative towards granting project financing. However, this will not jeopardise project plans as European financial institutions can be replaced by Chinese, de Margerie said during his company’s annual shareholders meeting this week.

In addition to the growing reluctance of the European banks to participate, also previously eager Japanese companies are turning negative towards the project. According to newspaper Vedomosti, the Japanese companies Mitsui and Mitsubishi in April this year both pulled out of negotiations with licenseholder Novatek.

Project partners Novatek and Total now increasingly look towards China for additional partners. From before, the CNPC controls a 20 percent stake of the joint venture. The project is likely to be on the agenda during President Vladimir Putin’s state visit to Shanghai this week.

As previously reported, parts of the Yamal LNG is planned shipped eastwards along the Northern Sea Route.

The troublesome political situation in Ukraine might put a stop to European banks’ involvement in Yamal. But it seems not to affect the French oilmen. Last week, engineering major Technip announced that it had won ”a very major contract for the Yamal liquefied natural gas (LNG) facility”. The contract will give an order intake estimated at euros 4.5 billion across the second and third quarters 2014, the company informs in a press release.

The total development cost of the Yamal LNG is estimated to $27 billion. The development budget for 2014 is $5 billion. When in full swing, presumably in 2017, the LNG plant will produce up to 16 million tons of LNG per year.