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FSUOGM PIPELINES & TRANSPORT FSUOGM

Novatek signs Arctic LNG 2 supply

deals with two Chinese firms

RUSSIA RUSSIA’S Novatek announced on January 11 spot, according to the US Energy Information
that it had struck separate long-term supply Administration (EIA). Large and small Chinese
Both deals cover agreements with two Chinese companies – Zhe- buyers alike have been in the news several times
supplies from Arctic jiang Provincial Energy Group and ENN Natural in recent months as they struck new deals to buy
LNG-2. Gas. LNG. Indeed, ENN also signed a long-term sup-
Both deals entail LNG being supplied from ply deal with the US’ Cheniere Energy in Octo-
Novatek’s Arctic LNG 2 project, which is under ber 2021.
construction and scheduled to start production Arctic LNG 2, which is located on the Gydan
in 2023. Peninsula in northern Siberia, will consist of
Novatek’s sales and purchase agreement three liquefaction trains, each with a capacity
(SPA) with Zhejiang builds on a heads of agree- of 6.6mn tpy and will use gas produced from
ment (HoA) signed between the two companies the Utrenneye field as feedstock. The plant will
in June 2021. It entails the supply of up to 1mn have a total capacity of 19.8 million tpy, as well as
tonnes per year (tpy) of LNG on a delivered ex cumulative gas condensate production capacity
ship (DES) basis over a period of 15 years. of 1.6mn tpy. It will be Novatek’s second LNG
Meanwhile, Novatek’s SPA with ENN terminal after Yamal LNG, which has been in
involves the supply of 600,000 tpy of LNG over service since 2017.
an 11-year period, also on a DES basis. That As of 31 December 2020, the Utrenneye
LNG will be delivered to ENN’s Zhoushan field’s proven and probably (2P) reserves totalled
LNG receiving terminal in China, while the 1.4 trillion cubic metres of natural gas and 90mn
LNG that is due to be delivered to Zhejiang tonnes of liquids.
will go to more than one of the company’s ter- Novatek – the largest independent gas pro-
minals in China. ducer in Russia, operates Arctic LNG 2 with a
“We have reached another milestone in suc- 60% interest. France’s TotalEnergies, China
cessful marketing of Novatek’s share of LNG National Petroleum Corp. (CNPC), China
to be produced by our Arctic LNG 2 project,” National Offshore Oil Corp. (CNOOC) and
stated Novatek’s chairman of the management Japan Arctic LNG – a consortium comprising
board, Leonid Mikhelson, in the announcement Mitsui & Co. and Japan Oil, Gas and Metals
about the ENN deal. “This is another LNG SPA National Corp. (JOGMEC) – each hold 10%
for delivery to the Chinese market, which is in stakes in the project.
line with our LNG strategy to expand sales to the All of the external funding for Arctic LNG
Asia-Pacific region with its growing demand for 2 was secured in December after a consortium
clean-burning natural gas.” of international banks signed loan agreements
China was the world’s largest importer of with the project. The banks agreed to provide
LNG in the first 10 months of 2010, overtaking $10.8bn for a period of up to 15 years for the
Japan, which had previously been in the top $21bn scheme. ™

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