Total Acquires 10 Pct Stake in Arctic LNG 2 from Novatek

  • Business & Finance

French oil and gas company Total has signed the definitive agreements with Russian natural gas producer PAO Novatek for the acquisition of a 10% interest in Arctic LNG 2, a giant liquefied natural gas project led by Novatek on the Gydan Peninsula in Russia. 

The transaction is expected to be closed by the end of the first quarter of 2019.

The definitive agreements follow the binding agreement inked at the 22nd Saint Petersburg International Economic Forum in May 2018.

Taking into account Total’s 19.4% stake in Novatek and Novatek’s intention to retain 60% of the project, the French company’s overall economic interest in this new LNG project will be approximately 21.6%. Should Novatek decide to reduce its participation below 60%, Total will have the possibility to increase its direct share up to 15%, as explained by Total.

What is more, the duo agreed that Total will have the opportunity to acquire a 10 to 15% direct interest in all Novatek’s future LNG projects located on the Yamal and Gydan peninsulas.

We are delighted to have concluded the definitive agreements for our entry into this new world class LNG project based on the vast Russian gas resources alongside our partner Novatek. Arctic LNG 2 builds on the success of Yamal LNG and will introduce several innovative solutions to further increase competitiveness,” Patrick Pouyanné, Chairman and CEO of Total, commented.

“We have worked closely with TOTAL for many years and have built a good working relationship based on mutual trust and respect. We are pleased to further develop our successful cooperation with them on our new Arctic LNG 2 project,“ Leonid Mikhelson, NOVATEK’s Chairman of the Management Board, noted.

With production capacity of 19.8 million tonnes per year (Mt/y), or 535,000 barrels of oil equivalent per day (boe/d), Arctic LNG 2 will develop over 7 billion boe of resources in the Utrenneye onshore gas and condensate field. The project will involve installation of three gravity-based structures in the Gulf of Ob on which three liquefaction trains of 6.6 Mt/y each will be installed.

Arctic LNG 2 production will be delivered to international markets by a fleet of ice-class LNG carriers that will be able to use the Northern Sea Route and a transshipment terminal in Kamchatka for cargoes destined for Asia and one close to Murmansk for those cargoes destined for Europe.

The project’s final investment decision is expected to be taken in the second half of 2019, with plans to start up the first liquefaction train in 2023.

 

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