Chinese companies may participate in Novatek’s Arctic LNG 2 project

Chinese oil and gas companies consider participating in the new Novatek’s Arctic LNG 2 project, announced Minister of Energy of Russia Alexander Novak, cited by Interfax news agency. He explained, that Chinese involvement in Arctic LNG 2 could be similar to the one in Yamal LNG project, which is owned by Novatek (50.1%, controlling stake), French oil and gas major Total (20%), Chinese CNPC (20%) and Chinese Silk Route fund (SRF) (9,9%). Apart from this, Chinese banks provided the lion’s share of loan-based funding for the project.

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Yamal LNG project. Image credit: Novatek

As of today, two major participants of the Arctic LNG 2 project are Novatek and Total,  which has recently agreed to acquire a 10% stake in Arctic LNG 2 for $2.55 billion with the option to acquire up to 5% additionally in the case Novatek decides to decrease its share from currently planned 60%. The deal is planned to be closed in the first quarter of 2019.

Within the framework of the Arctic LNG 2 project, Novatek plans to construct three LNG trains with a capacity of 6.6 million tonnes of liquefied natural gas per annum each. The project will use the hydrocarbon resources of the Utrenneye gas field on Gydan peninsula to the East of Yamal. Based on the Russian reserve classification, its proven reserves totaled 1,582 billion cubic meters of natural gas and 65 million tonnes of liquids. The company owns the export licence and thus would be able to sell its LNG to customers abroad. The location of the Arctic LNG 2 project in the middle of the Russian Arctic allows for geographical diversification of supplies, reaching both European and Asian customers.

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