Page 13 - bne_newspaper_February_02_2018

bne February 2018 Companies & Markets I 13
First LNG tanker
of Russia's Novatek ends up in UK
bne IntelliNews
The first shipment of liquefied natural gas (LNG) produced by Russian independent gas produc-
er Novatek ended up in England despite targeting Asian markets, Vedomosti daily and the Financial Times said on December 15.
Novatek's LNG gas being sold to the UK is particularly ironic given the hawkish stance taken by the government of Theresa May on Russia's allegedly interventionist geopolitics recently.
In addition Novatek, which has been granted a waiver to export LNG, now comes in direct competition with Russian state-run gas giant and pipeline exports monopolist Gazprom, which supplies gas to Europe.
Reportedly the first LNG tanker Christophe de Margerie which left the Sabetta terminal at the Yamal peninsula on December 9 was sold to Malaysian Petronas, which then sold the gas to the UK on the spot market.
“Novatek's LNG gas being sold to the UK is particularly ironic given the particularly hawkish stance taken by the government of Theresa May”
The spot price on gas spiked on December 12 to a record-high $400 per 1,000 square metres on the UK's National Balancing Point, due to a number of factors, most importantly to the explosion at the Austrian gas hub in Baumgarten, a key
node in Russia’s western orientated gas pipeline distribution system.
Gazprom supplies gas to the EU either on long-term contract or on the spot market. The company had no long-term
contracts in the UK, but nevertheless sells over 12bn cubic metres of gas on the sport market to the islands.
Previously Gazprom representatives were alarmed that Novatek's LNG will compete with pipeline supplies and
“Gazprom representatives were alarmed that Novatek's LNG will compete with pipeline supplies”
analysts surveyed by Vedomosti on the issue agree that there is no guarantee that Russian LNG will not be resold from Asian buyers back to Europe.
Novatek unveiled ambitious growth plans at its investor’s day, aiming to achieve compound gas output growth of 5.9% by 2030 and accounting for two thirds of Russia's LNG output.
Having just launched the major Yamal LNG project, Russia’s second LNG plant that was financed despite the Western sanctions, Novatek plans further expansion in the LNG markets, while reiterating the intention to maintain its market share on a stable domestic market.
"We deem the focus on LNG to be a play on global macro, including global growth, with the world transitioning to more ecologically-friendly gas consumption, and LNG prices," VTB Capital commented on December 13 in a report entitled "From domestic gas producer to global LNG player."
"Novatek remains in the sweet spot of Russia’s oil & gas sector, widely supported by the Russian government, and enjoying the lowest tax burden in the sector and the highest levels of profitability and cash flows," Renaissance Capital wrote on December 13 summing up the Strategy Day takeaways.
www.bne.eu