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Total eyes stake in LNG

transshipment complexes

INVESTMENT NOVATEK, Russia’s largest privately owned pro- LNG sales agreements
ducer of natural gas, is looking to sell a minority In related news, Novatek said in a separate state-
stake in its LNG transshipment unit to France’s ment on April 28 that it had signed 20-year sales
Total. and purchase agreements (SPAs) covering 100%
According to a statement from Novatek dated of future production from Arctic LNG con-
April 28, the two companies have signed a heads sortium. The SPAs will allow the consortium’s
of agreement (HoA) that provides for Total to members to load LNG in volumes correspond-
buy a 10% stake in Arctic Transshipment, ing to their equity stakes at the transshipment
a wholly owned subsidiary of Novatek. The complexes.
document paves the way for the French major “The SPAs provide for LNG supplies from
– which is already taking part in two Novatek- Arctic LNG 2 on FOB Murmansk and FOB
led LNG projects, Yamal LNG and Arctic LNG Kamchatka basis, with pricing formulas linked
2 – to expand its involvement in Russia’s LNG to international oil and gas benchmarks,” the
sector. company stated.
It will also make Total a shareholder in Arc- It also noted that sales would begin in 2023,
tic Transshipment, the company that Novatek when Arctic LNG 2 is due to bring the first train
formed to operate two LNG transshipment of its gas liquefaction plant on stream. The facil-
complexes in the Murmansk and Kamchatka ity will eventually have three trains, each with a
regions. These complexes, which are still under production capacity of 6.6mn tonnes per year Novatek noted
construction, will consist of floating LNG of LNG. It will also be able to turn up to 1.6mn
(FLNG) storage units with a capacity of 360,000 tpy, or barrels per day (bpd), of gas condensate. that Arctic
cubic metres each. They will each use two ship- Feedstock for the plant will come from Utren-
to-ship transshipment points to transfer LNG neye, a field that contains 1.434 trillion cubic Transshipment
turned out by Novatek’s joint ventures from metres of gas and 90mn tonnes of condensate.
Arc7 ice-breaking tankers to conventional Leonid Mikhelson, the chairman of Novatek’s would play a
tankers. management board, hailed the signing of the crucial role in
In its statement, Novatek noted that Arc- SPAs. “The long-term off-take agreements
tic Transshipment would play a crucial role between Arctic LNG 2 and its participants establishing
in establishing export routes for its LNG ensure the future revenue stream from LNG
production. sales and de-risk the project,” he commented. export routes
“The transshipment complexes are part of “This represents one of the most important
Novatek’s logistical chain to optimise the use milestones in attracting the project’s external for its LNG
of [its] Arc7 ice-class tanker fleet, with the aim financing, which will be completed in 2021.” production.
[of ensuring] efficient and cost-effective LNG Equity in the Arctic LNG 2 consortium is
transportation from Arctic LNG 2 and other divided between Novatek (operator), with 60%;
Novatek projects,” it said. Total, with 10%; China National Petroleum
VTBC analysts said they believe that “the par- Corp. (CNPC), with 10%; China National Off-
ticipation of a global company in Arctic Trans- shore Oil Corp. (CNOOC), with 10%; and the
shipment is supportive for Novatek due to the Japan Arctic LNG consortium, which includes
speedier monetisation of the project and risk Mitsui and Japan Oil Gas and Metals National
sharing”. Corp. (JOGMEC), with 10%.™

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