Page 144 - RusRPTNov21

· The company is to capture and store 5.2mnt/a of CO2 from its Obsky GCP (5mnt) and partly from Yamal LNG (0.2mnt). Obsky LNG could produce 2.2mnt/a of ammonia and 130kt of hydrogen. The company is planning to certify its CCS system to be able to trade CO2 credits.
· The pool of lenders for Arctic LNG 2 has been finalised, and the financing is to be formally obtained by YE21. The share of Russian banks in debt financing might grow twofold – from 30% to 60% – as the company has not seen support from European governments and export credit agencies in borrowing from European banks.
· Yamal LNG intends to increase the productivity of large-capacity trains from 114% to 120% from 2022. With the new train 4, Yamal LNG can reach 20mnt/a capacity. For 2021, the company expects over 19mnt production (18.8mnt in 2020).
· The idea of creating a gas market counterpart of OPEC is unlikely to be realised in the next ten years.
· The company needs a resource base to produce 70mnt of LNG by 2030, which is currently unavailable to Novatek, although in general it exists in Yamal and Gydan.
· Realistically, Russia could reach 120mnt/a LNG production by 2030.
· The planned launch date of train 1 of Arctic LNG 2 is 3Q23.
· The company is to increase the capacity of train 1 of the LNG
plant in Vysotsk from 660kt/a to 800kt/a by 2024.
We treat the newflow as neutral for the company. The guided Yamal LNG production of 19mnt and some 80% share of contracts are in line with our model. The potential increase in capacity of trains 1-3 of Yamal LNG could lift annual production 3% vs what we expect, with a similar effect on Yamal LNG’s EBITDA (+$0.2bn), which is a positive development in general, but unlikely to be market-moving for the stock.
The increase in Vysotsk LNG capacity might increase its EBITDA 10%, we calculate, but is unlikely to be visible for Novatek.
The capacity of Obsky LNG of 2.2mnt of ammonia is below the 5mnt guided by Mikhelson earlier (see our Novatek – As a Mirror of Russian Oil Evolution of 7
144 RUSSIA Country Report November 2021 www.intellinews.com