Novatek Signs Agreement with Aramco
Russian independent gas producer Novatek announced February 19 that it has signed a memorandum of understanding with Saudi Aramco. It also announced it had won the bidding for the gas assets of Russian firm Alrosa.
Novatek said that, according to the Saudi agreement, both will collaborate internationally on natural gas projects, including LNG supplies, development of LNG markets, gas exploration and production projects, as well as research and technology development.
Its CEO Leonid Mikhelson noted: "We see a wide array of exciting and mutually beneficial energy opportunities to cooperate with Saudi Arabia. Our company owns one of the world’s largest high-quality, low-cost conventional gas reserve base and has gained unique and valuable experience of developing LNG-projects in the Russian Arctic area. Novatek’s strategy envisages rapidly growing our LNG production and attracting international partners, and, accordingly, we welcome the interest of such a globally important company as Saudi Aramco to jointly collaborate with us in gas markets.”
It has been reported that Saudi state-owned Aramco has been interested in participating in Novatek's new Arctic LNG 2 project, which would be its second LNG project – and Russia's third – following completion of Yamal LNG, which began initial exports in December 2017.
However Aramco has not yet published a statement on its website, and Novatek's statement did not directly cite the Arctic LNG 2 venture - although Mikhelson did allude to its "experience of developing LNG-projects" in the Arctic, and Russian energy minister Alexander Novak back in July 2017 indicated that his government would support Aramco participation in the planned venture.
Saudi Aramco CEO Amin Nasser said July 2017 that the company plans to double its natural gas production to 23bn ft³/day over the coming decade but did not say how. Participation in overseas gas projects might make that target more achievable.
In May 2017 Novatek signed up potential technical partners for its Arctic LNG 2 venture, and in 2016 Japan's Marubeni expressed an interest in becoming one of the venture's equity partners.
New acreage
Novatek also announced February 19 it had won an open auction to acquire a 100% stake in Maretiom Investments which owns 100% of Geotransgaz and 100% of Velarion Investments, which owns 100% of Urengoy Gas Company, from Alrosa. It paid rubles 30.3bn ($587mn).
It said that Geotransgaz holds the Beregovoy licence area, containing an estimated 436mn barrels of oil equivalent (boe) as at end-2017, and produced 1.6bn m³/yr and 185,000 metric tons of gas condensate during 2017, while the Urengoy Gas Company holds the Ust-Yamsoveyskiy licence area, containing an estimated 650mn boe at end-2017 (both resource figures are according to the Russian resource classification).