Novatek signs deals to offload 20% stake in Arctic LNG 2

Novatek has reached separate agreements with two Chinese firms to sell a 20% stake in its planned Arctic LNG 2 liquefied natural gas (LNG) project.

The agreements were signed with China National Oil and Gas Exploration and Development Company (CNODC) and CNOOC.

According to these agreements, CNODC and CNOOC will enter the Arctic LNG 2 project by acquiring a 10% stake each.

The Russian gas producer did not reveal the financial terms of the deals.

Located on the Gydan Peninsula in the north of Siberia, the Arctic LNG 2 project is expected to cost $25.5bn. It will involve the construction of three LNG trains with a combined production capacity of 19.8Mtpa.

These LNG trains will be installed on gravity-based structure (GBS) platforms.

Novatek management board chairman Leonid Mikhelson said: “We are very glad that CNOOC has joined our Arctic LNG 2 project as our new partner since China represents one of the key consuming markets for our LNG sales.

“Arctic LNG 2 will be a game-changer in the global gas market, and our proven track record to successfully build an LNG facility in the Arctic zone, combined with a proven logistical model with access to prospective markets and large hydrocarbon resource base will ensure the successful implementation of this world-class project.”

The new LNG project is based on the hydrocarbon resources of the Utrenneye field, which has 2P reserves of 7,981 million barrels of oil equivalent.

Novatek aims to begin LNG production at the project in 2022-2023. The Arctic LNG 2 project also holds an export licence.

Last month, French energy giant Total agreed to acquire a direct 10% interest in the Arctic LNG 2 project.

The Russian firm also signed agreements this month with Vitol and Repsol to supply LNG from the project.

Other major projects of Novatek in the country include Yamal LNG and Sakhalin 2.

Meanwhile, the company commenced full-scale LNG production at the Cryogas-Vysotsk project.