Page 10 - GLNG Week 43 2021

GLNG EUROPE GLNG

Russian banks expand

support for Arctic LNG-2

INVESTMENT RUSSIAN banks have agreed to increase their stream in 2023. This will be followed by its sec-
financial support for the Novatek-led Arctic ond and third trains in 2024 and 2025, bringing
LNG-2 project, as its investors continue their its overall liquefaction capacity to 19.8mn tonnes
search for $11bn of external financing. per year (tpy).
Russia’s Sberbank, Gazprombank, Bank GPB Novatek CEO Leonid Mikhelson said at the
International, VEB.RF and Bank Otkritie Finan- start of September that Japanese and Chinese
cial Corp. agreed in April to provide a €3.11bn banks might provide more funds, and some $1bn
($3.76bn) credit line facility for the liquefaction was expected to come from France and Ger-
project. They have now increased this to €5.7bn. many. However, European environmentalists
External financing is expected to cover have urged their governments not to support the
around half of Arctic LNG-2’s overall cost of project because of its climate impact.
$21.3bn. The rest will be provided by the pro- “We have [European] partners in place, while
ject’s shareholders. Novatek operates Arctic we don’t see support from the government of
LNG-2 with a 60% interest, while French partner these partners,” Mikhelson said. “We have credit
TotalEnergies and China’s CNPC and CNOOC lines open for the third of the total financing
each hold 10%, and Japanese firms Mitsui and from the Russian banks. We can raise it from a
JOGMEC have 5% stakes. third to 60%.”
A final investment decision (FID) on Arc- Two Indian companies, Petronet LNG and
tic LNG-2 is already in place, although diffi- ONGC Videsh Ltd (OVL), were reported to be
culties obtaining sufficient external financing in talks on acquiring a stake in Arctic LNG-2 in
could slow down the project’s implementation. early September. Novatek has said it will main-
However, Novatek insists the project remains tain an interest of at least 50.1% in the project,
on schedule, with its first train due to come on leaving potentially a 9.9% stake up for grabs.™

Novatek reports strong Q3 result but fails

to fully capitalise on gas price spike

PERFORMANCE RUSSIA’S Novatek reported a year-on-year
surge in earnings in the third quarter, although
the company did not capitalise that much on the
spike in global gas prices, as the bulk of its sales
are hedged to oil.
The company’s EBITDA almost doubled to
RUB181.8bn ($2.6bn), while net profit surged to
RUB112.9bn from RUB13.2bn a year ago. Rev-
enues grew to RUB269.9bn from RUB161.2bn.
Its gas production was up 3% y/y at 16bn cubic that its higher gas price was likely the result of
metres, but down 6% quarter on quarter. higher oil prices rather than higher gas prices, as
“We think the market was likely expecting a most of its sales from the Yamal LNG plant was
bigger impact from the sharp increase in natural linked to the former.
gas prices globally,” analysts at Sova Capital said Novatek is currently seeking external financ-
in a research note, adding that the company’s ing for its next liquefaction project, Arctic
numbers were mostly in line with their expecta- LNG-2. Russia’s Sberbank, Gazprombank, Bank
tions. Whereas Novatek increased gas revenues GPB International, VEB.RF and Bank Otkritie
by 5% q/q, average JKM and TTF day-ahead Financial Corp. had agreed in April to provide a
prices were up over 80%, the brokerage said. €3.11bn ($3.76bn) credit line facility for the liq-
BCS Global Markets said the company uefaction project earlier this year, but they have
modestly outperformed expectations, adding now increased this to €5.7bn.™

P10 www. NEWSBASE .com Week 43 29•October•2021