Page 10 - FSUOGM Week 26

FSUOGM PIPELINES & TRANSPORT FSUOGM
Japanese firms buy 10% stake in Arctic LNG 2
RUSSIA
RUSSIAN natural gas developer Novatek has agreed to sell a 10% stake in its Arctic LNG 2 project to a consortium of Japanese rms.
State-owned Japan Oil, Gas and Metals National Corp. (JOGMEC) and Mitsui & Co will buy the stake through their Dutch-based joint venture Japan Arctic LNG, in which JOGMEC owns 75% and Mitsui holds 25%.
Total investment in Arctic LNG 2 is projected at $21-23bn.
Following the deal, Novatek will own 60% of the project, with France’s Total, state-run China National Oil and Gas Exploration and Devel- opment Co. (CNODC) and CNOOC Ltd each holding 10%.
Russia’s President Vladimir Putin told report- ers on June 29 that Japanese investments in the project would reach almost $3bn. e Japanese government, meanwhile, has called the project a centerpiece of the East Asian country’s economic co-operation with Russia.
Arctic LNG 2, which will be Novatek’s third LNG project, is anticipated to start up by around 2022-2023 and will have a capacity of 19.8mn
tonnes per year (tpy).
Mitsui president and CEO Tatsuo Yasunaga
downplayed concerns that the project could fall foul of Western sanctions against Russia during an investor call, saying his company had care- fully considered the sanctions-related risks.
Novatek, which intends to reach a final investment decision (FID) on the facility by the end of this year, said participation in the pro- ject would provide Mitsui and JOGMEC with a long-term o ake option of about 2 million tpy.
Novatek began delivering LNG to Japan from its Yamal LNG project under a long-term o ake agreement with Total last week. Yamal LNG started up in 2017 and was Novatek’s rst LNG project in the Russian Arctic Circle.
Commenting on the start of LNG deliveries, Leonid Mikhelson said: “Japan is an important LNG market and one of the priority destinations in our LNG marketing strategy.”
When Arctic LNG 2 comes online Novatek’s total LNG liquefaction capacity will increase to 37mn tpy, contributing signi cantly towards its 2030 capacity target of 57-58mn tpy.™
Novatek offers Gazprom LNG supplies
RUSSIA
RUSSIA’S second-largest gas producer Novatek is ready to supply LNG to its larger state-owned rival Gazprom next winter, amid the uncertainty surrounding the latter’s future gas transit deal with Ukraine, Interfax reported on July 2, citing the Novatek chief Leonid Mikhelson.
Mikhelson specified that he had not yet received any such requests from Gazprom, but had “contemplated the subject.”
e comments by Russia’s richest man appear more like a challenge than an o er of assistance as Gazprom, which holds a monopoly over Rus- sia’s gas pipeline exports, has previously cried foul over the potential harm that Novatek’s LNG supplies could in ict on its market share in Europe.
LNG is considered Gazprom’s weak spot. e company only has one 10mn tonne per year (tpy) liquefaction plant in operation on Sakhalin Island, and its e orts to advance other projects have oundered. It recently su ered a setback at its long-planned Baltic LNG venture, when its partner Royal Dutch Shell pulled out.
Novatek overtook Gazprom to become Rus- sia’s number-one LNG supplier last year, follow- ing a ramp-up of capacity at its 16.5mn tpy Yamal LNG terminal in the Russian Arctic, launched in December 2017. e company is also nearing Gazprom size in terms of market capitalisation, largely because of the success of its LNG strategy.
Mikhelson’s comments come as Gazprom rushes to complete the Nord Stream 2 pipeline to Germany before the start of 2020, when its long-term gas transit agreement with Ukraine expires. By completing the pipeline before then, Gazprom hopes it can secure more bene cial transit terms from Ukraine, and also minimise contractual volumes. ™
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Week 26 03•July•2019