Page 132 - RusRPTMar21

rating from MSCI for sustainability.
Gas market Management believes $7-8mmbtu is a realistic and more sustainable long-term gas price following the surge earlier this year. LNG imports in Europe should be at least flat YoY in 2021. In the future, the spread between Asian and European prices should drop as more LNG comes on to the market. In the company’s strategy, the company uses prices of $6-9/mmbtu. Management also noted that buyers in Asia want contracts linked to oil.
The share of gas in the EU’s power generation market remained stable, but the share of renewables increased to 38%, outpacing fossil fuels (37%).
The Asian energy market is equivalent to 43% of energy consumption vs. just 15% for EU.
There was only one FID globally in 2020, and there has been only one this year so far (the Qatar North Field expansion). Novatek believes this will have consequences for LNG buyers after 2025.
Novatek welcomes increased LNG production in Russia (from Russia and Gazprom), and the company could lower costs in Russia for equipment. Novatek should increase the competitiveness of Russian LNG.
Yamal LNG Yamal operated at 114% of its nameplate capacity and dispatched 225 cargoes, or 18.6mnt of LNG. Train 4 should reach full-scale production in the coming weeks. The train needs to be run for a year or year and a half before we can get a full picture of its scalability for future projects.
The navigational season on the Northern Sea Route (NSR) opened in May 2020. Although the traditional NSR navigation season ends in November, there were two cargoes in December 2020 and two in January. This year, the company plans to open the NSR earlier, possibly in April. In 2020, Novatek completed 34 voyages to the Asian market, 20 of which were long-term contracts and 14 of which were spot.
Novatek started to ship LNG transshipments in the Barents Sea in the Murmansk Region.
Future projects Novatek targets at least 80% of its Arctic LNG sales going towards the Asian market. Novatek is considering raising the capacity of Obskiy LNG by possibly 20-25% from the initial 5mnt plan. There has been no decision on FID on Arctic LNG 1, but a decision
132 RUSSIA Country Report March 2021 www.intellinews.com