Novatek inks Arctic LNG 2 supply deal with Shenergy

Russia’s largest independent natural gas producer and LNG operator Novatek has secured an LNG supply deal with China’s Shenergy Group.

Novatek said on Thursday the deal is for a cumulative supply of over 3 million tons of LNG from the Arctic LNG 2 project over a 15-year term.

The volumes will be delivered to LNG terminals in China on a delivered ex-ship (DES) basis.

“Our LNG commercial strategy is to diversify our client base and target end consumers in the fast-growing Asian Pacific region, and the LNG volumes produced from our Arctic LNG 2 project is core to our long-term objective of delivering affordable, secure and sustainable natural gas for many decades,” Leonid Mikhelson, Novatek’s chairman said.

“The Chinese market is one of the key regions in our LNG marketing strategy, and we plan to further increase our supplies of liquefied natural gas to this country,” he said.

The Arctic LNG 2 project includes the construction of three LNG liquefaction trains of 6.6 million tons per annum each, as well as 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 an innovative 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. As of 31 December 2020, the Utrenneye field’s 2P reserves under PRMS totaled 1,434 billion cubic meters of natural gas and 90 million tons of liquids.

The Project’s participants include: NOVATEK (60%), TOTAL (10%), CNPC (10%), CNOOC (10%) and the Japan Arctic LNG, consortium of Mitsui & Co and JOGMEC (10%).