CNOOC unit ships final Yamal LNG modules
Thursday, Aug 24, 2017
China Offshore Oil Engineering Corp. (COOEC), a subsidiary of China National Offshore Oil Corp. (CNOOC), said last week that it had completed the last two core kit modules for the Yamal LNG plant.

In a statement, CNOOC reported that the core kit modules had departed from the port of Qingdao by ship on August 16. The units will arrive in Sabetta, in northern Russia, where the Yamal LNG consortium is building its 16.5 million tpy gas liquefaction plant, later this year.

COOEC constructed the core kit modules within the framework of a US$1.643 billion contract signed with Yamal LNG in 2014. Under that agreement, its subcontractor McDermott Wuchuan built 36 compressor units for delivery to the consortium. At CNOOC’s behest, it used domestic materials and technologies to execute the deal, which represents China’s first foray into the export of gas liquefaction equipment.

“Through the project, COOEC has successfully mastered the LNG core process module construction technology and [has] entered the international high-end oil-gas equipment market,” CNOOC said in its statement. “It has also made breakthroughs in key technologies, including welding, deep-cooling heat preservation, hoisting of huge and irregular equipment and large-area fireproof paint coating.”

CNOOC noted that its subsidiary had completed all work on the project in less than three years. “The construction took 35 months and achieved a record of 386.3 million man-hours without any lost-time injury,” it stated.
Supplies and equipment
COOEC’s efforts to uphold the contract will be a boon for China.
Two of the minority shareholders in the Yamal LNG consortium are state-controlled Chinese entities, with China National Petroleum Corp. (CNPC) owning a 20% stake and the Silk Road Fund holding 9.9%. France’s Total also has 20%, while Novatek has retained a 50.1% stake. Moreover, the group has already arranged to export a sizeable portion of its production to China.

But these are not the only benefits. The deal will also help COOEC’s bottom line, as it is the largest foreign equipment order that the company has ever filled. Additionally, the company has used the project as a means of establishing China as a source of sophisticated high-technology equipment such as compressors for LNG plants.

As such, the contract could help make COOEC and other Chinese companies more competitive with the Western service providers that now dominate the sector.

The completion of the last two core kit modules is also good news for Yamal LNG.
Tight schedule
The joint venture, which is majority-owned by Russia’s largest privately owned gas producer Novatek, is pushing to bring the first 5.5 million tpy train of its LNG plant on stream before the end of this year. It then hopes to launch the plant’s second and third trains ahead of schedule in 2018 and 2019.

Yamal LNG will be Russia’s second LNG plant. The facility will process natural gas from Yuzhno-Tambeiskoye and other fields on the Yamal Peninsula. It will use ice-breaking tankers to export its production via the Northern Sea Route (NSR), which passes through Russia’s Arctic waters.

Novatek and its partners in Yamal LNG have also been using the NSR to deliver equipment to the construction site in Sabetta. This choice of route has reduced the cost of equipment deliveries, but it has also led to logistical complications, as the NSR is ice-bound for eight months of the year. The consortium has coped with these difficulties by building its plant in modular fashion.

This involves installing 36 core kit modules that weigh about 8,000 tonnes each rather than building a smaller number of larger gas compression facilities. It has also arranged to have the units delivered by ice-breaking heavy lift ships that were built specifically for the Yamal LNG project. These vessels can bring equipment to Sabetta even in winter conditions, when the NSR is frozen.
This NewsBase commentary is from our ChinaOil publication. To sign up for your free trial, click this link:

Read more NewsBase top stories via this link:

Find out more about Asian Oil and Gas from NewsBase