Saipem, Intesa Sanpaolo, CDP, Sace: Draghi liquidates Russia’s LNG?
Fearing further sanctions on Russia, according to Reuters the Italian government is suspending funding for the Arctic Lng 2 project on liquefied gas: Saipem is involved. Insured by Sace, the loan was for 500 million euros. All the details
In response to Russia's invasion of Ukraine, Italy suspended its share of funding for the Arctic LNG 2 liquefied gas project, developed by the Russian gas company Novatek. Reuters wrote this exclusively, based on information received from two anonymous sources.
So far the Russian energy sector, a pillar of the economy and fundamental to European supplies, has not been subjected to sanctions, but it is a possibility that the United States has not ruled out.
Acting in advance, then, Italy has decided to re-evaluate its exposure to the project. According to estimates , the loan amounts to approximately 500 million euros and is provided by Cassa Depositi e Prestiti and Intesa Sanpaolo.
WHAT IS THE ARCTIC LNG PROJECT 2
The Arctic LNG 2 project, as the name suggests, is located in the Russian Siberian Arctic – more precisely in the western part, on the Gyda peninsula – and concerns liquefied natural gas (LNG). It consists of three liquefaction units ("trains", in jargon) with a capacity of 19.8 million tons per year of LNG and 1.6 million of gas condensate.
Before the start of the war in Ukraine, the plant was supposed to go into operation in 2023 and reach maximum production capacity in 2026.
The Novatek website states that the capital expenditures required to launch the project at full capacity are estimated at $ 21.3 billion equivalent.
In November, Novatek announced that agreements had been reached on the € 9.5 billion Arctic LNG 2 loan, with both Russian and foreign banks.
WHO ARE THE SHAREHOLDERS
Novatek owns a 60 per cent stake in the Arctic LNG 2 project. The other shareholders are the French energy company TotalEnergies with 10 per cent; the Chinese oil companies CNPC and CNOOC, with 10 per cent each; and the Japanese consortium Arctic LNG (the industrial conglomerate Mitsui and the government body JOGMEC belong to it) with 10 per cent.
THE ROLE OF SAIPEM, CDP AND INTESA SANPAOLO IN RUSSIA
Various Italian parties participate in Arctic LNG 2: Saipem (through SAREM, a joint venture with Renaissance) and SACE, the state-owned company that deals with the insurance of Italian companies in foreign transactions. The French engineering-energy group Technip, present in Italy as Technip Italy, is also involved. In August 2019 Saipem signed an agreement with Technip France SA and NIPIgaspererabotka to participate in the project.
Luigi Di Maio, then Vice President of the Council and Minister of Economic Development and Labor, was also present at the signing of the contracts for Arctic LNG 2, in December 2018 at Palazzo Chigi.
The loan is then handled by Cassa Depositi e Prestiti (controlled by the Ministry of Economy) and Banca Intesa Russia (the subsidiary in the country of Intesa Sanpaolo , which manages most of the Italian investments in Russia and vice versa).
WHAT SACE DOES IN RUSSIA
SACE, as stated by the chief executive officer Pierfrancesco Latini, owns a portfolio of assets in Russia worth approximately 3.2 billion euros. Reuters writes that the company has insured Russia-related projects and investments worth nearly € 5 billion.
WHAT HAPPENS TO THE ARCTIC LNG LOAN 2
Reuters sources state that the loan for Arctic LNG 2 has not been disbursed, and that there are ongoing discussions between Intesa Sanpaolo, Cassa Depositi e Prestiti, SACE and the Treasury Ministry. For the moment, however – declares a third source – the agreement remains in force.
Beyond the invasion of Ukraine, which prompted several energy companies to break away from Russia, already last year some members of the European Parliament raised doubts about the project, considering it incompatible with the climate objectives of the Union.
WHAT RECOMMON SAYS ABOUT SACE'S ROLE IN RUSSIA
In a statement published on Monday 1 March, ReCommon – which presents itself as an "association that fights against abuses of power" – asked SACE to clarify its position on the war in Ukraine.
In the press release, ReCommon writes that “in the two-year period 2018-2019 SACE guaranteed 108 new operations in Russia, for a total amount of approximately 2.1 billion euros. Of these, 1.3 billion euros for the construction of a large project in the oil and gas sector. Also in 2020, characterized by the impact of the pandemic on commercial relations between Italy and Russia, 230 of the 237 million euros of guaranteed operations concerned the hydrocarbon sector ".
"Among the main operations guaranteed by SACE in Russia in recent years", continues the association, "we recall in 2016 the Yamal LNG fossil gas megaproject of the Russian company Novatek, in joint venture with the French Total, for a total of 400 million of Euro. In this case, SACE guaranteed part of the Intesa Sanpaolo bank loan, which amounted to a total of 750 million euros ".
“The same fate – and the same actors – for Arctic LNG-2, despite the fact that the export credit agencies of France and Germany pulled out of the agreement […]. In this case, the guaranteed amount is around 1 billion euros, of which at least 500 million relating again to a loan from Intesa Sanpaolo ”.
"The special relationship between SACE and Novatek", reconstructs ReCommon, "is rooted in the strategic cooperation memorandum stipulated in December 2018 , under the supervision of the Ministry for Economic Development, which concerned Arctic LNG-2 and possible new projects that could participate in Italian companies ".
“More recently, SACE participated in the guarantee for the Amur Gas Chemical Complex project of Gazprom, the main Russian energy company controlled by the state […]. The operation, which ended in December 2021, saw SACE affix a guarantee for part of the total loan of 2.6 billion dollars granted by some commercial banks ".
Could the revelations from Reuters tell the story of the Italian government's willingness to respond to the association's attacks?
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/italia-finanziamento-arctic-lng-2-russia-saipem/ on Wed, 02 Mar 2022 11:11:49 +0000.