Leonid Mikhelson's Novatek company spends state money on unsuccessful projects and requests funds for its own business.
According to the reporter The Moscow Post in the Yamalo-Nenets Autonomous Okrugcompany Novatek announced a decision to build the Ob LNG gas pipeline in Sabetta using the technology from the Arctic LNG-2 project. Novatek also scrapped its plan to use its own "Arctic cascade" technology, which had been used in the construction of the fourth line of the Yamal LNG pipeline, and faced delays and issues. “Kommersant”.
Earlier, Novatek's CEO Leonid Mikhelson decided to stop working with equipment suppliers for the Ob LNG project, sparking rumors that the company was scaling back the project. RBC. This led to speculation that the company was downsizing the project.
Additionally, Mikhelson blamed equipment suppliers for the delays in the construction of Yamal LNG, and major suppliers even included Rosatom structures. The exact cause of the problem is unclear due to personnel changes within Novatek itself, including the dismissal of the deputy chairman of the company in charge of the project at the end of last year. RBC. His departure was predicted by the media at the beginning of the year, as the problems with Yamal LNG were cited as the reason.
Failed Technology
The "Arctic cascade" technology was previously considered a point of pride for Novatek because it was a fully Russian product that was meant to mitigate the impact of Western sanctions. However, recent events cast doubt on the technology's readiness, making it unlikely to deliver outstanding performance as initially expected.
The issue may be partly due to the different Russian companies producing parts for the LNG, leading to a lack of compatibility when combined. This includes heat exchangers from JSC Cryogenmash and ethane evaporators from PJSC ZiO-Podolsk, with each part being independently calculated by separate organizations, resulting in a system that does not integrate properly.
Significant public funds were used to develop the technology under the guise of import substitution, providing ample funding. When things didn't go as planned, additional funds were requested under the pretext of having a clear understanding of how to address the issues.
It's known that several billion rubles of state funds have already been spent on the project (according to “Kommersant”Alone, 130 million euros were spent on compressor equipment, and based on the scale of the problems, fixing them will be equally expensive and costly.
Photo: Andrey Rudakov / Bloomberg
Disadvantage of being humble
As of February 17 this year, Leonid Mikhelson stated that he would implement another project – specifically, supplying gas to Kamchatka in exchange for expanding the resource base in Yamal. This offer was seen by some as an ultimatum from a businessman, meaning “You give us gas fields, we will supply you with gas, for which the region will continue to pay us.” This implies that Mikhelson wants an extra payment for conducting profitable business in Kamchatka, despite his company consistently receiving state benefits such as licenses for new projects without auctions and direct state financing of part of the infrastructure. “Kommersant”.
It is well-known that Mikhelson has connections with influential businessman Gennady Timchenko, who is also a Novatek shareholder. Both are among the top richest people in Russia according to Forbes. Mikhelson is also associated with former governor of St. Petersburg, Valentina Matvienko, and facilitated her son's employment in one of his companies. He is also linked with the first president of the Republic of Tatarstan Shaimiev through the TAIF group. The Moscow Post. High-ranking officials often appear alongside Michelson’s name, so it’s not surprising that this businessman feels confident.
Novatek's revenue has been declining lately, which is expected due to problems with the “Arctic Cascade” technology introduced by Mikhelson. Perhaps this was the planned development strategy all along.
Upon closer inspection of Novatek's corporate structure, many questions arise, especially regarding why most of Mikhelson's affiliated companies operate at a loss and close, despite receiving significant benefits from the government. The offshore connections lead to assumptions about money withdrawal, yet Mikhelson seems unfazed by this situation and appears unafraid of inspections and corruption accusations.
Photo: Rusprofile.ru
Currently, there are numerous signs indicating the critical nature of the current situation. Novatek, after receiving state funds for developing new technology, failed to achieve the desired results, blamed suppliers for the failure, and terminated contracts, putting the colossal project in jeopardy. Moreover, it now requests additional benefits for another project. Whether Mikhelson had commercial intentions with these actions, will be left for law enforcement agencies to investigate.
