Page 5 - FSUOGM Week 04 2022

FSUOGM COMMENTARY FSUOGM

YATEK's facilities are
located in the west of
the Yakutia region.

trains will be added at a later stage, ramping up Sinopec and China’s Silk Road Fund hold 10%
production to 18mn tpy. shares each in Sibur, while another Chinese
The problem is that YATEC’s fields are all investor CEFC has a 14% stake in Rosneft.
located in the west of the Yakutia region, far
away from the coast. The company therefore What next?
plans to build a 1,300-km pipeline to connect its While attracting the interest of a key Chinese
resources with the project site. The LNG will be gas importer like Zhejiang is certainly a sign of
delivered to markets across Asia, but as the deal progress for Yakutsk LNG, it must be cautioned
with Zhejiang indicates, the main focus is China. that the project is still at a relatively early stage
of development. YATEC is yet to award a front-
Targeting China end engineering design (FEED) study, and by its
“The Asian-Pacific countries are the target sales own admission, there is considerable explora-
direction for the company as part of our long- tion work yet to be done. The company said last
term strategy,” Avdolyan said in a statement. year its goal was to expand its reserve base from
“The Chinese gas market is one of the most 390 bcm at present to more than 1 trillion cubic
promising and fastest growing. Following the metres in order to underpin the project.
climate agenda, our LNG will be one of the most There are also reasons why only Russia’s larg-
environmentally friendly in the industry, which est gas majors have so far managed to progress
fits into China’s strategy of achieving carbon projects. They can face lower regulatory hurdles
neutrality by 2060.” and can wield their substantial influence in Mos-
YATEK is seeking to follow in the footsteps of cow to secure financial and other support. It is
Novatek, which has struck a raft of LNG export questionable whether Yamal LNG, for example,
deals with Chinese partners over the years. Most would have gone ahead without the substantial
recently, it signed agreements earlier this month tax breaks afforded by the government, not to
to deliver 1mn tpy of LNG to Zhejiang and mention its funding for necessary infrastructure.
0.6mn tpy to China’s ENN. It is clearly in Moscow’s interest to remove
Zhejiang’s potential investment in Yakutsk these barriers to entry and allow a larger pool
LNG would also mark a further expansion of of investors to develop LNG. Russia wants to
China’s footprint in the Russian oil and gas sec- be producing as much as 140mn tpy of LNG by
tor. Chinese companies are already involved in 2035, which could make it the largest exporter in
Novatek’s Yamal LNG and Arctic LNG-2 pro- the world. But it seems unlikely that the country’s
jects, and also hold shares in various Russian oil leading gas firms will be able to reach anywhere
and gas fields. China’s Sinopec has also recently near this target on their own. As such, liberalisa-
agreed to invest in a large chemicals complex tion is needed to get as many competent devel-
that Sibur wants to build in the Amur region. opers working on projects as possible. ™

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