Novatek to set up a an arctic transhipment hub
The new terminal will be a key logistics hub for the Yamal LNG project
Novatek has unveiled plans for a new Arctic LNG transhipment hub to be built on a former submarine base at Bechevinka terminal located at an abandoned Navy compound in Kamchatka that will cost $1.5 billion and have a capacity of 20 million tons of LNG per year.
The new terminal will be a key logistics hub for the Yamal LNG project as well as future Arctic LNG production projects; LNG will be transferred from special ice-class carriers to conventional vessels before heading to Asia-Pacific customers.
Production commenced at the Yamal LNG facility on the Kara Sea in December 2017 and last year, Novatek signed agreements with Chinese National Petroleum Company (CNPC) and China Development Bank for the Arctic LNG 2 project, whose construction is expected to begin in 2019, with first of 3 trains in operation by 2023 and gas will be exported via the Northern Sea Route.
“Novatek’s long-term development strategy envisages a significant growth in LNG production from the company’s vast hydrocarbon resource base located on the Yamal and Gydan peninsulas in the Arctic zone of over 55 million tons per annum by 2030; establishing an efficient Northern Sea Route shipping model is one of our key priorities to realize our long-term strategy, while creating our own shipping company fully supports this goal to optimize transport cost and ensure a well-balanced, centralized management to improve the competitiveness of Novatek’s Arctic projects” commented Novatek’s CEO Leonid Mikhelson who also said the second liquefaction train at the Yamal LNG project is set to start up in September 2018, while the third train is planned for start-up in December 2018 or January 2019. The three trains are expected to exceed the project’s planned production capacity of 16.5 mtpa; a decision has been made to add a fourth train by early 2020.
The front-end engineering design for Novatek’s second project, the Arctic LNG-2 is expected to be completed in November while the investment decision on the Kamchatka LNG terminal project is expected between July and December. Talks with the Japanese partners interested in participating in the Arctic LNG-2 project are well advance and planned for completion during this year.
The Arctic LNG-2 project on the Gydan peninsula is planned for start-up from 2022 to 2025.
A week earlier Novatek announced the formation of a new transportation subsidiary (Maritime Arctic Transport LLC) to manage and optimize transportation costs, build up the unique competencies of Arctic navigation and ensure centralized management of the Arctic fleet.
Novatek, founded in 1994, is one of the largest independent natural gas producers in Russia, engaged in exploration, production, processing and marketing of natural gas and liquid hydrocarbons; its upstream activities are concentrated in Yamal-Nenets Autonomous Region, the world’s largest natural gas producing area accounting 80% of Russia’s natural gas production and 16% of the world’s gas production.
At the 22nd Saint Petersburg International Economic Forum, in the presence of the President of Russia Vladimir Putin and the President of France Emmanuel Macron, Chairman of the Management Board of Novatek Leonid Mikhelson and Chairman and Chief Executive Officer of Total Patrick Pouyanné signed a binding agreement on the terms to enter the Arctic LNG 2 project, which provides for the acquisition by Total of a 10% participation interest as well as the right to acquire additionally up to 5% if Novatek decides to decrease its participation below the currently planned 60%. The value is 25.5 billion dollars; transaction will be closed within 31 March 2019.
Two months ago Novatek and Cosco Shipping reviewed the cooperation record on the Yamal LNG Project and agreed to expand the mutual cooperation in scope and depth, especially to expand the dialogue on Arctic transportation collaboration.