Russia's Arctic LNG 2 seeks ₩1.37 trillion damages from Hanwha Ocean for contract breach

Arctic LNG 2, the Russian liquefied natural gas producer, has filed an international arbitration claim against Hanwha Ocean for $1 billion in damages, according to Dailian on Thursday.

Arctic LNG 2 alleges Hanwha Ocean breached a step-in agreement related to a ship construction contract. A step-in agreement gives a third party the right to assume a counterparty's obligations and rights if the original party fails to perform. Hanwha Ocean terminated the contract, triggering the dispute. The claim is filed with the Singapore International Arbitration Centre (SIAC).

The damage amount equals roughly 6.6% of Hanwha Ocean's FY2025 revenue. Arbitration proceedings typically take two to four years to complete. The shipbuilder is separately managing multiple LNG carrier orders from other customers, including Taiwan's Yang Ming Marine Transportation.

Hanwha Ocean's market capitalisation was ₩25.1 trillion as of September 2. The company earned ₩1.25 trillion of net income in FY2025 on revenue of ₩12.8 trillion. Payment of damages, if awarded, would reduce equity by roughly 16% at current valuation.