Novatek Lands Major Gas Asset for LNG Plant
Russian independent Novatek has won an upstream asset auction, giving it the right to explore and develop more gas resources in the Gydan region of the Yamal Peninsula, it said June 9.
The licence is to last 27 years and cost the privately owned company a one-off payment of rubles 2.262bn ($40mn). As NGW magazine reported early June, the purchase will fuel the rivalry between Novatek and state-controlled Gazprom – which formerly held the exclusive rights to export Russian gas.
Novatek already owns significant resources on the Gydan peninsula including the Utrenneye, Geofizicheskoye and Ladertoyskoye fields, as well as the Trehbugorniy, Nyavuyahskiy, West-Solpatinskiy, Tanamskiy and North-Tanamskiy licence areas.
The Gydanskiy license area is close to Utrenneye field, the field that will serve as the resource base for Novatek's planned Arctic LNG-2 project. This new licence area allows the company to consider significant new long-term LNG projects. At the moment the company is bringing its first LNG project on stream, the first train of the 16.5mn metric tons/yr Yamal LNG being due to start up this year.
Although LNG prices are relatively low at the moment as more supply is available, the price Novatek paid the government for right to develop the reserves is low. The company has said that a second LNG project will need to be a lot cheaper to build than the first, in which it is partnered by French Total, which also owns a stake in Novatek. A final investment decision on Arctic LNG 2 – Arctic LNG 1 being Yamal LNG – could be taken this year.
Last month Novatek signed a framework deal with Technip and Linde, both of which it hopes will provide western technology for Arctic LNG 2. And on June 1, Novatek signed a memo of understanding with two Russian authorities to build a new yard to produce large units, probably for the LNG project.
The new licence area’s resources according to the Russian classification system are 4.74bn barrels of oil equivalent.
William Powell