Report: Yamal LNG unaffected by low oil prices

Yamal LNG’s output is less sensitive to oil price movements due to the project’s cash cost, according to Novatek’s chief financial officer Mark Gyetvay.

Speaking at an investment summit in Russia, Gyetvay said that Yamal’s estimated cost, the extraction, liquefaction and shipping, comes at about US$3 per mmBtu, with $2.5 set for shipping, Reuters reports.

At current LNG spot prices in Asia of $5.50 per mmBtu, Yamal LNG has an advantage over some of the high-cost producing competitors, Gyetvay said.

Yamal LNG is expected to ship first liquefied natural gas from its first liquefaction train by the end of 2017. The second and third LNG trains are expected to come on stream in the second half of 2018 and the second half of 2019, respectively, reaching the full production capacity of 16.5 mtpa.

The project will use the northern route to ship LNG from Russia to China during the summer. The voyage from the facility to Chinese customers, using the northern route, will take about 18 days, with 32 days needed to transport LNG to Asia via the Mediterranean Sean and Suez canal.

Gyetvay additionally expects the global LNG market to swing into a deficit from 2023 to 2025 as no FID decisions on new projects has been reached over the past two years, and no such decision is expected in the coming year.

With projects’ construction period between five to seven years, with none currently being built, Gyetvay notes it is expected that this will have an effect on the supply to 2025 and beyond.

He also informed that the feasibility work for Novatek’s second project, Arctic LNG-2, is expected to be completed within the next 12 to 18 months.

The company could target first LNG from the second project in 2023, when Novatek expects the market would need additional volumes.

Shareholders in the Yamal LNG project are Novatek, as the operator with a 50.1 percent stake, CNPC and Total with 20 percent stake each and China’s Silk Road Fund with a 9.9 percent stake.

Novatek recently signed a memorandum of understanding with Japan Bank for International Cooperation (JBIC) to cooperate on liquefied natural gas projects, including possibly the Arctic LNG-2 project.

However, Novatek’s CEO Leonid Mikhelson was reported as saying that the Russian company has still not chosen its partners for the project.

 

LNG World News Staff

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