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    Novatek Plans Arctic-2 LNG Stake Sale To Drive Raised Ambition

Summary

The Russian company hopes to build capacity to 70mn mt/yr by 2030.

by: Tim Gosling

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Natural Gas & LNG News, Europe, Liquified Natural Gas (LNG), Corporate, Mergers & Acquisitions, Exploration & Production, Import/Export, Arctic Focus, Yamal/Yamal 2, News By Country, Russia

Novatek Plans Arctic-2 LNG Stake Sale To Drive Raised Ambition

Russia's Novatek is set to sell another stake in its Arctic 2 LNG project to help drive a rise in its LNG production capacity to 70mn mt/yr by 2030, a senior official said on May 13.

Now working on the 19.8mn mt/yr Arctic-2, the company is seeking to raise its 2030 target from the current plan of 57mn mt/yr, CFO Mark Gyetvay said at a conference in Amsterdam, according to media reports. Gyetvay said last week that Novatek hopes to reach an FID on Arctic 2 by the third quarter of 2019.

“The final investment decision (FID) will be made sometime early third quarter. We don’t have a date yet, but we have contracted 75% of the construction already, and materials,” Gyetvay told a conference in Lithuania on May 8, according to Reuters.

Novatek’s hopes of raising its 2030 capacity target are based on a build-up of resources on the Yamal and Gydan peninsulas, notes Platts. The discovery of an estimated 900bn m3 at the North Obskiy gas prospect late last year added to Novatek’s existing 3.3tn m3 resource base.

Russia’s biggest independent gas producer has boosted its profile with a strong push to export LNG from projects in the far east and Arctic. The Yamal LNG project, with three trains each of 5.5mn mt/yr, became fully operational last year.

The Arctic LNG 2 project will have three LNG trains of 6.6mn mt/yr each, liquefying gas from the Utrennee field in Russia's far north. In March, French Total took a 10% stake, while two Chinese companies have each taken 19% as well, leaving Novatek with 70% since.

Gyetvay said that Novatek wants to hold 60%, so another 10% stake is about to be sold. "In a relatively short time we will announce a fourth partner," he said.

The official also suggested that the company could boost capacity at the other end of the country. The 600,000 mt/yr Baltic Sea Cryogas-Vysotsk project was launched in April, but Novatek is already mulling an expansion to 1.7mn mt/yr, Gyetvay said.

Novatek reported in April that it increased gas production by 13% year-on-year to a total of 18.66bn m3 in the first quarter of 2019. LNG exports increased by 255.5% to 3.41bn m3 across the same period.