Page 125 - RusRPTFeb21

● Novatek
Russia’s LNG producer​ ​Novatek​ will send two loads of LNG to Asia via the Northern Sea Route. ​Two loads will be sent with icebreaker support by mid-February to take advantage of very high spot gas prices, reports Kommersant, while noting volumes are likely to be limited unless swaps are agreed to with European customers.
Very high prices are pulling available LNG to Asia. However, available spot loads and LNG tankers are both limited. Current prices for LNG in NE Asia are above $28/mcf ($990/mcm) both on spot markets and February futures prices, per data from Platts and Trafigura. This should be making the arbitrage trade between that region and Europe – where prices are high but still almost 3x lower – very attractive. However, the number of available LNG ships is itself limited and reportedly very expensive, given the high demand, keeping price differentials from being fully arbitraged together by LNG traders.
Novatek itself can, of course, ship LNG directly to Asia with Yamal LNG’s dedicated fleet of ice-breaking tankers, but has only limited amounts of spot LNG available to redirect to Asia (most of its sales are made via long-term, oil-linked contracts). Additionally, in the midst of winter, those tankers require ice-breaker escort, and those ships are also in limited supply.
Therefore, while the current, unexpected, weather-related shortage of LNG in Asia will boost profitability somewhat in 1Q21, the event’s real importance for Novatek is underlining the viability of the company’s ambitious plans to grow LNG production to 70mtpa by 2030.
9.2.2 ​Automotive corporate news
9.2.3​ Aviation corporate news
125 ​RUSSIA Country Report​ February 2021 www.intellinews.com
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