Photo: Illustration purposes only (Image courtesy of Novatek)

Novatek-Total firm up Arctic LNG 2 stake sale

Russia’s largest independent natural gas producer and LNG operator, Novatek the definitive agreement for the sale of 10 percent participation interest in Arctic LNG 2 to France’s Total. 

The company said on Tuesday the transaction under the newly signed sales and purchase agreement will be closed by the end of the first quarter of 2019.

The Arctic LNG 2 project has made significant development progress since May 2018, Novatek said.

Front-end engineering and design (FEED) work has been completed in October confirming the preliminary cost estimates between $20 billion and $21 billion.

Moreover, additional exploration drilling confirmed significant reserve growth at the project’s Utrenneye field, and accordingly, the Russian state reserves commission subsequently increased the field’s natural gas reserves to approximately two trillion cubic meters under the Russian reserves classification.

Total consideration includes a payment for the 10 percent participation interest as well as financing for the project through the capital of Arctic LNG 2.

The Arctic LNG 2 project envisages constructing three LNG trains at 6.6 million tons per annum each, using gravity-based structure (GBS) platforms.

Novatek has already contracted the Saipem-Renaissance joint venture for the onshore engineering and construction of the GBS platforms.

Furthermore, Italy’s Nuovo Pignone, which is part of Baker Hughes, a GE company, secured a contract in December to provide turbo machinery equipment for the giant LNG export project in Russia. The agreement provides for the supply of gas turbine compressors and gas turbine generators for the three liquefaction trains for the Arctic LNG 2 project.

Germany’s Siemens also recently won a contract to provide equipment for the Arctic LNG 2 project. Under this deal, Siemens will provide feed gas compressors and boil-off gas compressors for Novatek’s LNG export project.