Page 96 - RusRPTOct19

rising LNG production more than offset weaker global gas prices. Its 50.1%- owned Yamal LNG project in the Russian Arctic reached its full 16.5mn tonnes per year (tpy) capacity last December, just two years after its launch.
Russia's second-largest natural gas producer and liquefied natural gas (LNG) runner-up Novatek could face set backs from the US sanctions imposed on Chinese shipping company Cosco. Novatek's first LNG plant Yamal could lose third of its LNG tanker fleet, as six Arc7 vessels are owned by Cosco and Canadian Teekay, Kommersant daily reported on October 1. Resolving the logistics issues of LNG delivery is seen as crucial for Novatek to catch up with adding LNG output. Analysts told Vedomosti daily previously that about 30 tankers would be enough to handle all the LNG, which will be produced at Novatek's operating Yamal LNG and planned Arctic LNG-2. Analysts surveyed by Kommersant believe that the sanctioned Chinese tankers could still be used on domestic Russian routes, but the tankers are likely to be docked until the situation with the sanctions is clarified. Novatek also risks losing another five tankers Arc7, that are to be delivered by Dynagas. Cosco controls 25.5% in the company, which should exempt it from sanctions, but special cases might apply. Another three tankers were ordered from 50/50 joint venture of Japanese MOL and Shanghai LNG, another Cosco affiliate. This would make 14 out 15 Arc7 Novatek's tankers directly or indirectly affected by the sanctions. Most recently the CEO of Novatek Leonid Mikhelson said the company is looking for new sales channels as Yamal's productivity was 7%-8% higher than projected in 1H19, with the excess output expected at about 1.5mn tonnes of LNG by the end of 2019. He added that the plant will launch an additional line in 1Q20, which will increase output by an extra 1mn tons
Novatek is no longer considering bringing new partners in to its Arctic LNG-2 project. It will keep a 60% stake in the project. The share of project financing for Arctic LNG-2 could be increased to 40%, from the currently planned 30%. The targeted share of spot sales for Arctic LNG-2 could be lower than 50%. Previously, spot sales were expected to predominate. The final investment decision (FID) for the Ob LNG project will be made in 1H20. The guidance is fairly conservative. The planned capacity of the Arctic LNG-1 project is currently 19.8 mln tonnes. The Utrenneye terminal that is being constructed for Arctic LNG-2 could be expanded by three trains, effectively doubling the capacity. Novatek is ready to increase its LNG production target to 65-75 mln tonnes by 2030, from the 57 mln tonnes projected in the current strategy. The partners in the Arctic LNG-2 project have approved the FID. The capex budget is $21.3 bln, and trains are scheduled to launch in 2023, 2024 and 2026. More than 90% of the long-lead items for the project (including cryogenic heat exchangers, gas turbines and the compressors for the liquefaction trains) have been ordered.
● Sibur
Sibur and Gazprom entered into a preliminary agreement in September setting out the key commercial terms for the supply of liquefied petroleum gas (LPG) from Gazprom’s Amur Gas Processing Plant (GPP) to SIBUR’s Amur Gas Chemical Complex (GCC). The document was signed by Dmitry Konov, Chairman of the Management Board of SIBUR Holding, and Alexey Miller, Chairman of Gazprom's Management Committee. Gazprom’s Amur GPP treats natural gas to be supplied to China and also produces liquefied petroleum gas, pentane-hexane fraction, helium, and ethane fraction. In its turn, SIBUR is developing the project to construct Amur GCC, which
96 RUSSIA Country Report October 2019 ww.intellinews.com