French company GTT stops working in Russia

The French engineering group Gaztransport & Technigaz (GTT) is leaving the Russian Federation: now the Russians will be left without tankers for transporting liquefied natural gas, the press service of the company reports.

The management made this decision after studying the latest packages of European sanctions, which include a ban on providing engineering services to Russian companies.

GTT said its contract with Russian shipbuilding company Zvezda for the supply of 15 liquefied natural gas (LNG) tankers will be terminated as of January 8.

“And GTT’s intervention in the operation of two state-of-the-art vessels for the transportation of LNG will be limited to ensuring the safety of the projects and the integrity of technologies by the current international sanctions.”

Some tanker owners began to refuse to carry Russian ESPO oil from Pacific ports, fearing the price threshold set by the Group of Seven (G7).

Containers produced by GTT are required for the safe storage of fuel in large volumes at temperatures up to -163°С.

Updated information on the GTT expose

As indicated in several press releases published in 2022, GTT is involved in Russia in the design of the tanks of 15 icebreaking LNG noses being built by Zvezda Shipbuilding Complex, as well as in the design of three GBS 1 for Saren BV 2.

As of 1 October 2022, €74m of revenue remains to be recognized from LNG icebreakers by 2025 and €12m from GBS by 2027, representing a total exposure of less than 6% of the order book.

After an in-depth analysis of European sanctions packages No. 8 and 9, which, in particular, prohibit engineering services with Russian companies, the Group announces the termination of its activities in Russia.

From January 8, 2023, the contract with Zvezda will be suspended and GTT’s intervention will be limited to two state-of-the-art LNG carriers to ensure the safety of the projects and the integrity of the technology by international sanctions.

As for the GBS projects, the terms of the GTT exit are now being finalized

These elements will have a financial impact mainly from 2023. In the future, GTT’s order portfolio will no longer include projects in Russia. In addition, starting in 2023, the Group’s annual targets will exclude revenues and EBITDA that would have been generated from the last services performed in Russia.

It will be recalled that other orders being built at Asian shipyards concern six LNG icebreakers and two FSU 3, intended specifically for Russian-Arctic projects. To date, these projects are proceeding as usual.

As of October 1, 2022, these orders represented a total revenue of €31 million for GTT, to be recognized by 2024. Finally, the eight conventional LNG bows ordered by international shipowners and being built at Asian shipyards are also designed for projects in the Russian Arctic but can operate in all conditions.

The Group remains sensitive to the development of the situation and takes all necessary measures to protect its employees and stakeholders in accordance with international sanctions.

The meaning of the LNG terminal

LNG terminals (Liquefied Natural Gas) are special port facilities designed for the liquefaction and shipment of liquefied natural gas, as well as for receiving and regasification of liquefied natural gas.

There are also liquefied gas regasification tankers, which are specially designed-platforms or LNG tankers equipped with regasification units.

As of 2010, the total nominal regasification capacity of installed LNG terminals in the world was 847 billion cubic meters of gas per year. The capacity of the liquefaction and dispatch terminals of liquefied gas was 340 billion cubic meters. m of gas per year.

Liquefied natural gas is a naturally occurring hydrocarbon gas that is gaseous at normal temperature and pressure, but turns into a liquid at very low temperatures, making it easier to store and transport.

The typical process that takes place at the LNG terminal is divided into several phases.

The gas is first extracted and transported to an enrichment plant, where it is purified by removing any condensates such as water, oils, dirt, and other gases such as CO2 and H2S. Mercury is also removed from the gas stream at the terminal.

The gas is then cooled to a stage where it is not liquefied. LNG is then stored in tanks and can be loaded and shipped.

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