• Natural Gas News

    Yamal Train 4 Produces FIrst LNG: Novatek


The first cargo could be loaded in a few months, according to Novatek

by: William Powell

Posted in:

NGW News Alert, Natural Gas & LNG News, Europe, Liquefied Natural Gas (LNG), Top Stories, Premium, Corporate, Exploration & Production, Import/Export, Technology, News By Country, Russia

Yamal Train 4 Produces FIrst LNG: Novatek

The fourth train at Yamal LNG is now producing its first drops of LNG, Novatek CFO Mark Gyetvay told the European Gas Conference online January 26. He said the first full cargo from the 900,000 metric ton/yr plant could be loaded on to a tanker in a few months.

The train uses new liquefaction technology called Arctic Cascade, which could be adapted for the larger trains that will serve the planned Obsk LNG plant. There were problems with the fourth train that meant it missed its original target date of late 2019. But if it performs well then a final investment decision (FID) for Obsk LNG could be taken later this year, he said.

Gyetvay told the panel, chaired by David Ledesma, that the recent high prices seen for spot deliveries of LNG in Asia were no incentive to take FID generally: he said that a range of $7-8/mn Btu would be better for buyers and sellers: it would stimulate demand while also bringing revenues to justify the cost. 

He said that the need for reliable energy had been demonstrated by the rolling black/brown-outs in California over the summer: too much renewable energy was part of the cause. He said that reports that gas would fall out of the energy mix were grossly exaggerated, and also that the LNG industry was already working to reduce its carbon emissions.

That point had been made earlier by Total's LNG head, Eric Festa, who listed several measures the company was taking to lower emissions from existing and planned projects. Most of the emissions – over 80% – come from the compression turbines so converting them to run on green hydrogen or building them to run on renewable electricity would dramatically lower the carbon footprint. Gas is going to be necessary for the Paris Climate Agreement, he said.

He said that the best way to be resilient was to keep costs low: this was the reasoning behind Total's investment in Mexico's Costa Azul plant – the only positive FID in LNG last year – and in Novatek's LNG trains in Russia's far north. Total however committed to taking half the output of Costa Azul, which confirmed the trend towards more equity buyers, as Gyetvay had pointed out.

Katan Hirachand, managing director for energy project finance at Societe Generale (SocGen), told the conference that financing would remain available for LNG, as offtake contracts shortened from their standard length to ten years or so.  It was about value, not duration, he said.

Purchasing decisions have been complicated by the unknowable speed of the energy transition but there was a lot of money looking for lower revenues, he said, such as energy infrastructure. And costs of financing could be lowered if projects exceeded their environmental, social and governance objectives.