Page 113 - RusRPTFeb19

Russian independent gas producer Novatek increased natural gas production 8.5% y/y to 68.8bcm in 2018, the company reported in its preliminary operating data on January 16. Novatek has been an investor’s darling and is at the forefront of the Kremlin’s campaign to make Russia a major player in the liquid natural gas (LNG) business. It is also one of the best run companies in Russia, consistently bring in its investment projects on time and under budget. Hydrocarbon production totalled 548.4mn barrels of oil equivalent, or an increase of 6.9% y/y. The key driver of the strong production growth in 2018 was the early launch of Yamal LNG, its new LNG processing plant that feeds from the Yamal gas fields. In 2018, the company sold some 6bcm of LNG on the international markets, compared with 0.1bcm in 2017. Novatek was also active last year in M&A, spending RUB30.3bn ($455mn) on diamond monopolist Alrosa’s Geotransgas and Urengoy gas company, Kommersant reports. In 2019, we think the company will continue to demonstrate strong growth dynamics and increase natural gas production 9% y/y, with LNG production at Yamal LNG more than doubling to 16.5mmt on the back of the low base effect, as Yamal LNG was only launched in full at the end of the year.
Novatek signed a €2.2bn ($2.5bn) contract on the design and construction of gravity-based structure (GBS) platforms for Arctic LNG-2 with the joint venture of Saipem and Renaissance, Vedomosti reports on 20 December. The joint venture is supposed to design and construct three gravity- based structure platforms, with an area of more than 50k square metres, 30 metres in height and with 687k cubic metres of LNG storage each. Separately, Kommersant reports that the company has signed a €500mn ($570mn) contract with Nuovo Pignone, a General Electric subsidiary, on the supply of 20 gas turbines with capacity of 65-75MWt. The company has signed these contracts on the construction and supply of equipment for Arctic LNG-2 project before taking the final investment decision (FID), which is supposed to be made in 2019. However, given that the company has demonstrated its ability to launch projects of high complexity ahead of schedule with the Yamal LNG, we anticipate that the Arctic LNG-2 project might also be delivered on time. Total capex for Arctic LNG-2 is slated at around $20-21bn. Arctic LNG-2 is to reach capacity of 19.8mmt/a of LNG (three lines with 6.6mmt/a of capacity each), with the first line planned to be put on stream by the end of 2022, and the other two to be launched in 2023 and 2024. In May, Novatek and Total signed a binding agreement on selling a 10% stake in the Arctic LNG-2 project. Novatek announced that the project’s value was determined at $25.5bn.
The Yamal LNG (liquefied natural gas) facility of Russian independent gas producer Novatek reached the full projected capacity of 16.5mn tonnes annually on December 7. Novatek said in a statement quoting CEO and core owner Leonid Mikhelson as saying: “Our achievements point the way to creating a large-scale LNG cluster on the basis of conventional natural gas resources of the Yamal and the Gydan peninsulas to help us reach the strategic goal of 55–60mn tonnes of LNG by 2030.” Mikhelson added that the actual capacity of each stage of the plant surpasses the projected capacity of 5.5mn tonnes by around 10%. The Yamal LNG facility is based on the Yuzhno- Tambeiskoye field on the northern Yamal Peninsula. Novatek holds 50.1% in the project, France’s Total has 20%, China’s CNPC owns 20% and China’s Silk Road Fund holds 9.9%.
Novatek made the first shipment from the third train at Yamal LNG, Kommersant reports. The project’s capacity increased to 16.5mmt of LNG after
113 RUSSIA Country Report February 2019 www.intellinews.com