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    Novatek Targets New Layers at Russian Fields


The fields supply the domestic market, which has served as a hedge for Novatek against international volatility.

by: Joseph Murphy

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Novatek Targets New Layers at Russian Fields

Russia's biggest independent gas producer Novatek has launched pilot production at gas condensate-bearing layers at the North-Russkoye and East-Tazovskoye gas fields in Western Siberia, it said on August 3.

The fields are the first to enter production in Novatek's North-Russky cluster and are expected to yield 7.7bn m3 of gas and 1mn metric tonnes of condensate/yr at full capacity. North-Russkoye, the larger of the two fields, began trial output in December last year.

The other North-Russky fields – Dorogovskoye and Kharbeyskoye – are scheduled for launch in 2020 and 2021, Novatek said last year. This will raise total output at the cluster to 13bn m3/yr. All this gas will be sold domestically.

The domestic market "has proved to be very stable as compared to international markets in recent months," Novatek CEO Leonid Mikhelson commented in a statement. "Moreover, the additional volumes of gas condensate will ensure full utilisation of our processing facilities."

Novatek's domestic business served as a hedge against international market volatility in the second quarter. Its gas sales in Russia were down only 4.6% year on year at 14.4bn m3 in the three months. Its international business, in contrast, suffered a 32% slump in volumes to 2.5bn m3, owing to the Covid-19 pandemic's impact on markets.

Novatek saw net profits slide 40% yr/yr in the second quarter, to rubles 41.6bn ($573mn).