Novatek forms structure of Arctic LNG 2 project’s partnership

  • Project & Tenders

Russian gas producer Novatek has closed the sale of participation interests in its Arctic LNG 2 Project to two Chinese companies and a consortium of two Japanese companies. 

Image of LNG Plant
Image of the LNG Plant

Arctic LNG 2 project is a major liquefied natural gas development led by Novatek on the Gydan Peninsula, Russia. The project will be developed using offshore platforms in northern West Siberia.

The agreements with two Chinese companies were announced in April and confirmed in June and the agreement with the Japanese consortium was signed in late June, bringing Novatek one step closer to project final investment decision (FID).

On Monday, July 22 Novatek said it had closed the sale of interests to wholly owned subsidiary of China National Petroleum Corporation (CNPC), wholly owned subsidiary of CNOOC Ltd., and the consortium of Mitsui & Co and Japan Oil, Gas and Metals National Corporation (Japan Arctic LNG).

“We now have formed the structure of the project’s participants by successfully closing the sale of interests in Arctic LNG 2,” noted Leonid Mikhelson, Novatek’s Chairman of the Management Board.

“The target level of Novatek’s participation has been reached, allowing us to make the final investment decision and optimally use the company’s cash flow to finance our new projects.”

Front-end engineering and design for the project was completed last year, confirming preliminary cost estimates of between $20 billion and $21 billion.

Wood Mackenzie previously said that Novatek was believed to be targeting FID this month or next, with start-up of the first train scheduled for 2022-2023.

The Arctic LNG 2 project envisages constructing three LNG trains at 6.6 million tons per annum each, using gravity-based structure (GBS) platforms. The project is based on the hydrocarbon resources of the Utrenneye field.

As of December 31, 2018, the Utrenneye field’s 2P reserves under PRMS totaled 1,138 billion cubic meters of natural gas and 57 million tons of liquids. Under the Russian classification reserves totaled 1,978 billion cubic meters of natural gas and 105 million tons of liquids. OOO Arctic LNG 2 owns an LNG export license.

The project participants now include Novatek (60%), Total (10%), CNPC (10%), CNOOC (10%) and the Japan Arctic LNG (10%).

Offshore Energy Today Staff

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