Page 10 - GLNG Week 31

GLNG COMMENTARY GLNG

same period last year, at 88mn tonnes. Imports the start date was postponed to the second quar-
by China, which is among the main recipients ter of this year, and later the third quarter.
of Yamal LNG’s gas, surged 21% y/y to 17mn Despite its small size compared with Yamal
tonnes. LNG’s three operational 5.5mn tpy trains, the
Chinese demand for imports is expected to fourth train is important, as Novatek will be
be strong during the remainder of the year, Gyet- deploying its very own liquefaction capacity,
vay said, as its economy steadily recovers from known as Arctic Cascade, for the first time. If
COVID-19 lockdowns. Full-year supplies are the technology proves a success it will be used at
anticipated to reach 65mn tonnes. the 5mn tpy Obsky LNG plant, which Novatek
EU imports, on the other hand, were up wants to build without foreign partners.
less than 1% y/y at 21mn tonnes. Growth was The gas firm is yet to take a final investment
undermined not only by COVID-19 restric- decision (FID) on Obsky LNG, and this mile-
tions and economic stagnation but also by large stone is unlikely to be reached until Arctic Cas-
inventories. cade has been proved to work.
“Europe remains the most liquid market with “Engineering work is proceeding forward
its ability to consume additional LNG volumes, on the Obsky LNG as we previously advised but
but high inventory levels will constrain natural there is really nothing new to report on this pro-
gas prices through the third quarter and up to ject at this time,” Gyetvay said.
the start of the traditional winter season,” Gyet- In contrast, the CFO hailed strong progress at The fourth train
vay said. the 19.8mn tpy Arctic LNG-2 project, on which
Underground gas storage utilisation was at Novatek, Total and Chinese and Japanese part- is important, as
a record high of 83% in mid-July, versus 77% a ners took an FID last year. Despite COVID-19 Novatek will be
year earlier. disruptions, the project is 21% complete and still
Gas prices at the world’s key hubs are now at on track for first gas in 2023. deploying its very
less than $2.00 per mmBtu. Forward curves are Novatek has signed some heads of agree-
encouraging and a rebound is predicted in the ments (HoAs) on the sale of its share of the ter- own liquefaction
fourth quarter, Gyetvay said, but this recovery minal’s gas. Its project partners Total, China’s
will be limited by US LNG supplies resuming. CNPC and CNOOC, and Japan’s Mitsui and capacity,
JOGMEC, committed to taking their shares of known as Arctic
Operations its supply before an FID was taken.
On the operations front, Yamal LNG was work- At the same time, Novatek is hesitant to Cascade, for the
ing at 109% of its nameplate capacity in the sec- finalise contracts before market conditions
ond quarter, according to Gyetvay. He added improve. first time.
that no customers had declared forces majeures “At these low natural gas prices, which are
during the period. near historical lows, this is making the contract
The completion of Yamal LNG’s fourth train process very, very complicated,” Gyetvay said.
has been pushed again to the fourth quarter, “Sellers are not willing to fix current low prices.
Gyetvay confirmed, with commissioning due to They’re not willing to commit to long-term con-
start shortly after that. The 0.9mn tpy plant was tracts because we all know that the gas prices will
originally due on stream by the end of 2019, but eventually increase.”™

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