News Post
Total will receive 10% in the project "Arctic LNG 2"
St. Petersburg, May 25 (Argus) - Total will become the owner of 10% in the Novatek project for the creation of a 19.8 million ton / year LNG production facility on the Gydan Peninsula - Arctic LNG-2. The companies signed an agreement on May 24 in St. Petersburg as part of the visit to Russia of French President Emmanuel Macron.
The agreement is legally binding, the transaction is expected to be closed in the first quarter of 2019, Leonid Mikhelson, chairman of Novatek's board, told journalists. The transaction will be completed after the relevant corporate procedures and obtaining the approval of the antimonopoly authority.
Total enters the project "Arctic LNG 2" at an early stage: Novatek has not yet made a final investment decision (FID) for the project. It is assumed that the first production line of the plant with the capacity of 6.6 million tons per year will start operating in 2023.
Novatek plans to retain a 60% stake in Arctic LNG 2. The company does not exclude the possibility of selling part of these shares in the future, but in any case will retain a controlling stake in the project, Mikhelson stressed.
The agreement with Total stipulates that the company will be able to increase its stake in Arctic LNG 2 from 10% to 15%, if Novatek decides to partially sell its shares from its stake.
Mikhelson did not disclose the value of the deal with Total, but noted that the total cost of the project "Arctic LNG 2" is estimated at $ 25.5 billion. Shareholders will invest in the project in proportion to their shares, explained Mikhelson.
Total already owns a 19% stake in Novatek and a 20% stake in the Yamal LNG plant, the first phase of which capacity of 5.5 million tonnes / year Novatek put into operation in December. The total capacity of the Yamal LNG plant should be 17.4 million tons per year.
Novatek is also negotiating the entry of the Chinese company CNPC into the Arctic LNG 2 project, which is a shareholder of Yamal LNG with a 20% stake. But the companies' agreements on "Arctic LNG 2" are still of a framework nature.
In addition, Novatek in February signed a memorandum on cooperation in the field of LNG with the Saudi company Saudi Aramco. The document, in particular, suggests joint investment of companies in projects in the Yamal-Nenets Autonomous District, but specific projects were not called. The Yamal LNG plant and the future site of the Arctic LNG 2 enterprise are located in this region. Negotiations with Saudi Aramco continue, Mikhelson said, without revealing the details.
The main source of raw materials for the plant "Arctic LNG 2" should be the Morning deposit on the Gydan Peninsula. It is expected that the gas production in the Morning field in 2023 will be 4-5 billion m3 / year, and by 2026 will increase to 30 billion m3 / year of natural gas and will hold at this level for 15 years.
Novatek is already working on the development of the field, including the construction of roads and the creation of an electric power infrastructure.
Novatek also holds licenses for the development of a number of subsoil plots on the Gydan Peninsula, including the Geophysical, Gydan, Storm and Ladertoy deposits.
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