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A subsidiary of CNOOC has signed a $1.6 billion deal to build equipment for an LNG project in Siberia, the company announced on Wednesday.

Under the terms of the agreement, CNOOC Offshore Oil Engineering Company will build “core modules” for the liquefaction process in the Yamal project in the Russian Arctic.

Russia’s number two gas producer Novatek is developing the $27 billion Yamal LNG project with Total and CNPC.

The first production unit is scheduled to launch in 2017, with annual capacity of 5.5 million tonnes.