Page 143 - RusRPTNov21

● Yamal LNG is functioning at 114% of capacity. Its LNG sales in 2021 are expected to be above 18mnt.
● 80% of Arctic LNG 2 sales will be made to Asian customers.
● The commissioning of the transshipment terminal in Kamchatka in
2023 will help to bring down the transportation time to key Asian customers to 4-6 days. Over the past few years, Novatek has perfected the logistics, confirming the possibility of east-bound Northern Sea Route passages during 9-10 months of the year. Mikhelson expects that, as the icebreaker fleet is commissioned, year-round passage will already be possible in 2024.
● The Arctic LNG 2 trains are expected to launch in 2023, 2024 and 2025 (instead of 2026, as planned initially).
● Currently, Yamal LNG is working on the methodology to calculate and verify the emissions of its LNG cargoes for its customers.
● Novatek is looking at a CCS pilot project in Yamal. This is meant for its own production facilities but the company does not rule out the creation of a CCS cluster on the Yamal peninsula. Potentially, it could help Novatek decarbonise and achieve carbon neutrality by 2035 in LNG production and shipments.
● Novatek has reiterated that it is working on producing ‘blue hydrogen’, with a launch in 2026-27. Some of the output might be used to convert gas turbines at LNG plants to a hydrogen-methane mix, while some 2mnt of blue ammonia could be exported.
● Novatek expects that, by 2025, more than half of the global LNG trade will be made up of short-term deals, with pricing pegged to gas or LNG indices. The company sees shorter average terms for long-term contracts as well (up to 15 years vs. 20-25 years earlier).
● Underinvestment might become a problem for the LNG industry in general.
Leonid Mikhelson, the Chairman of the Novatek Management Board on October 18 made a number of remarks about the company’s plans, Interfax reports. The key takeaways were as follows.
· Novatek could increase gas supplies to Europe, but requires new contracts or a signal that consumption is committed to do that. Current gas prices are too high, while European leaders are not taking measures to stabilise the cost of gas.
· Long-term contracts make up some 80% of Yamal LNG’s sales (instead of the 96% planned initially, given the plant is operating above capacity). The rest is sold at spot. Some 3.8mnt of LNG could be sold at spot in 2021. 80% of Yamal LNG’s spot volumes went to Asia this year. Spot prices are now 2.5-3.0x that of the longterm contract prices.
· Yamal LNG’s unit emissions are 0.24t CO2/t of LNG vs. 0.38t average in the world. Novatek will strive to bring down emissions still further.
143 RUSSIA Country Report November 2021 www.intellinews.com