Novatek has taken a step toward bolstering its logistics and marine construction capabilities by registering a new company dedicated to building ships and floating infrastructure, according to the state registry of authorized companies.
The new unit, registered on March 25 and named Severny Inzhiniring - which translates to Northern Engineering - will be led by Ilya Lushchikov. Lushchikov concurrently heads Novatek’s Murmansk LNG project and is expected to direct the operations of the newly formed entity.
The move comes as Novatek, a Russian liquefied natural gas producer, is operating in an environment where access to specialized vessels has been limited. Western sanctions imposed in 2022 have curtailed Russia’s ability to procure ice-class tankers that are required to move LNG cargoes in Arctic conditions.
One of the domestic yards positioned to supply these vessels is Zvezda, which is described as Russia’s most advanced shipbuilder for large Arc7 ice-class tankers. Zvezda has delivered one Arc7-class tanker intended for Novatek’s Arctic LNG 2 project. Novatek holds a 60% stake in Arctic LNG 2 and has announced plans for 15 Arc7 ice-class tankers to be constructed at the Zvezda shipyard.
By establishing Severny Inzhiniring, Novatek appears to be expanding its in-house capacity to construct vessels and floating facilities that support LNG operations. The company’s stated plan for a fleet of Arc7 tankers at Zvezda and the appointment of an experienced project head to the new unit reflect its effort to address a constrained supply of the specialized ships needed to transport LNG from Arctic projects.
Summary
Novatek has established a shipbuilding and floating facilities unit named Severny Inzhiniring on March 25, led by Ilya Lushchikov. The creation of the entity occurs against a backdrop of reduced access to ice-class LNG tankers after Western sanctions in 2022. Zvezda shipyard, which has delivered one Arc7 tanker for Novatek’s Arctic LNG 2 plant, is slated to build 15 Arc7 ice-class vessels for that project. Novatek owns 60% of Arctic LNG 2.
Key points
- Novatek formed Severny Inzhiniring on March 25 to build vessels and floating facilities, led by Ilya Lushchikov.
- Western sanctions imposed in 2022 have limited Russia’s access to ice-class tankers needed to transport LNG cargos.
- Zvezda has delivered one Arc7 tanker for Arctic LNG 2; Novatek plans for 15 Arc7 tankers to be constructed at the yard. Sectors impacted include energy, shipbuilding, and marine logistics.
Risks and uncertainties
- Supply constraint risk - Continued difficulty in procuring ice-class tankers due to sanctions could restrict LNG shipping capacity and affect energy exports.
- Production and delivery uncertainty - Zvezda has delivered one Arc7 tanker so far, while Novatek plans 15 to be built; the timeline and completion risk for additional deliveries remain implicit.
- Concentration risk - Reliance on domestic shipbuilding capacity, including Zvezda and now an in-house unit, concentrates exposure within the shipbuilding and marine logistics sectors.