Novatek bags long-term Arctic LNG 2 offtake deals

Novatek informed on Wednesday that the Arctic LNG 2 project has concluded 20-year LNG sales and purchase agreements with all the project’s participants.

The deals cover the total LNG production volume of the Arctic LNG 2 project.

The LNG sales from Arctic LNG 2’s first liquefaction train are planned to commence in 2023, Novatek said in its statement.

The SPAs provide for LNG supplies from Arctic LNG 2 on FOB Murmansk and FOB Kamchatka basis with pricing formulas linked to international oil and gas benchmarks.

The LNG offtake volumes are set in proportion to the respective participants’ ownership stakes in the project.

To remind, the project participants include Novatek (60 per cent), Total (10 per cent), CNPC (10 per cent), CNOOC (10 per cent) and the consortium of Mitsui and JOGMEC (10 per cent).

“The long-term offtake agreements between Arctic LNG 2 and its participants ensure the future revenue stream from LNG sales and de-risks the project,” noted Leonid Mikhelson, Novatek’s chairman.

“This represents one of the most important milestones in attracting the project’s external financing that will be completed in 2021”, he said.

Arctic LNG 2 envisages constructing three LNG liquefaction trains of 6.6 million tons per annum each, as well as a cumulative gas condensate production capacity of 1.6 million tons per annum.

The total LNG capacity of the three liquefaction trains will be 19.8 million tons.

The project utilizes a construction concept using gravity-based structure (GBS) platforms to reduce overall capital cost and minimize the project’s environmental footprint in the Arctic zone of Russia.