Photo: Courtesy of Novatek

Novatek inks Arctic LNG 2 deal with Zhejiang Energy

Russia’s largest independent natural gas producer and LNG player Novatek has secured a long-term supply deal with Zhejiang Energy.

Novatek inks Arctic LNG 2 deal with Zhejiang Energy
Courtesy of Novatek

The companies signed a heads of agreement for the supply of chilled fuel from the Arctic LNG 2 project.

The agreement builds on the MOU the companies signed in October 2019, Novatek said in its statement.

The agreement establishes the key commercial terms for the annual supply of up to one million tons of LNG from the Arctic LNG 2 project for a term of 15 years.

The LNG will be delivered on a DES basis to Zhejiang Energy’s LNG terminals in China, including feedstock for the buyer’s new gas-fired power generation facilities.

“The agreement is consistent with our commercial LNG strategy to diversify our client base and target end consumers in the rapidly developing Asian Pacific market,” Novatek’s head Leonid Mikhelson said.

“The fast-growing Chinese market is a key region in our LNG marketing strategy, and we plan to further increase our supplies of cleaner-burning LNG to assist China in reaching its net zero targets by 2060,” he said.

Arctic LNG 2 envisages constructing three LNG liquefaction trains of 6.6 million tons per annum each. It will also have 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.