Novatek Signs Non-binding Deals for Arctic LNG 2 Project

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  • The Arctic LNG 2 project envisages constructing three LNG trains at 6.6 million tons per annum each, using gravity-based structure (GBS) platforms.
  • The Heads of Agreement envisages concluding a 15-year contract with annual supply of one (1) million tons of LNG from the Arctic LNG 2 project as well as other NOVATEK’s projects.
  • The LNG will be delivered ex-ship primarily to markets on the Iberian Peninsula.
  • The Project is based on the hydrocarbon resources of the Utrenneye field
  • As of 31 December 2018, the Utrenneye field’s 2P reserves under PRMS totaled 1,138 billion cubic meters of natural gas and 57 million tons of liquids.
  • Under the Russian classification reserves totaled 1,978 billion cubic meters of natural gas and 105 million tons of liquids. OOO Arctic LNG 2 owns an LNG export license.

In a major development, Russian gas producer Novatek announced on Tuesday that they have signed two non-binding deals to supply liquefied natural gas (LNG) from their Arctic LNG 2 project, reports Reuters.

What is it?

  • Its trading subsidiary Novatek Gas and Power Asia announced during the LNG 2019 conference in Shanghai the signing of non-binding heads of agreement for LNG supply to Repsol, the company said in a statement on Tuesday.
  • The contract is for one million tonnes of LNG a year over 15 years from the Arctic LNG 2 project and other Novatek projects, the company said.

How will it help Novatek?

“The agreement for the sale of LNG would allow us to increase our market presence on the Iberian Peninsula where Russian pipeline gas is not supplied,” said Novatek’s first deputy chairman of the management board, Lev Feodosyev.

“Expanding our supply geography and diversifying our long-term contract customer base is consistent with the company’s strategy to ramp up LNG production in the Russian Arctic,” Feodosyev said in a statement.

The Vitol Contract

Earlier on Tuesday, Novatek said its trading subsidiary signed non-binding heads of agreement with energy trading firm Vitol SA for 1 million tonnes a year of LNG over 15 years. LNG for the Vitol contract will be shipped on a free-on-board (FOB) basis to Novatek’s transhipment terminals in the Murmansk region and Kamchatka, the company said.

  • The Arctic LNG 2 project includes three LNG trains at 6.6 million tons per annum each.
  • A final investment decision to go ahead with the project is expected to be taken in the second half of 2019, with plans to start up the first liquefaction train in 2023.

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Source: Reuters