Russia’s Novatek Concludes 23-year LNG Deal With France’s ENGIE

Russia’s Novatek announced on Tuesday that its subsidiary Novatek Gas & Power concluded a long-term contract with France’s ENGIE (formerly GDF Suez) for the supply of LNG from the Yamal LNG project. 

“Signing another long-term binding agreement on LNG supply from the Yamal LNG Project ensures well balanced LNG sales portfolio and contributes to closing the Project’s external financing. ENGIE is a reliable partner, and we expect that this cooperation will enable us to gain additional expertise in LNG marketing” Chairman of the Management Board of Novatek, Leonid Mikhelson commented in a note. 

ENGIE welcomed the deal, arguing that the 23-year contract for one million tons of LNG a year will help diversifying its portfolio. The LNG will be supplied to FOB Montoir-de-Bretagne terminal. 

“These volumes will complement and diversify ENGIE long term supply portfolio. They will allow us to address the growing LNG demand, as well as our customers concern for a reliable, environmental-friendly energy” Gerard Mestrallet, Chief Executive Officer of ENGIE. 

The parts did not disclose the price of the deal. 

Also on Tuesday, Gennady Timchenko, co-owner of Russia’s second gas producer, said that the Yamal LNG project would be finished.  Novatek has been hit by sanctions, and it has limited access to global capital markets.  

Last week, Total’s Chief Executive Patrick Pouyanne said on Friday he expected lenders to unblock funds for the $27 billion Yamal LNG project by the end of the year. Novatek (60%), Total (20%) and China’s CNPC (20%) are the three partners in the terminal, which is the largest industrial project in the Arctic. The start of LNG production is planned for 2017.