PAO NOVATEK announced today that its wholly owned subsidiary, NOVATEK Gas & Power Asia Pte. Ltd., and Shenergy Group signed a long-term LNG Sales and Purchase Agreement (“SPA”) for the LNG produced from the Arctic LNG 2 project.

The SPA stipulates the cumulative supply of more than three million tons of LNG for a term of 15 years and will be delivered to LNG terminals in China on DES basis.

“Our LNG commercial strategy is to diversify our client base and target end consumers in the fast-growing Asian Pacific region, and the LNG volumes produced from our Arctic LNG 2 project is core to our long-term objective of delivering affordable, secure and sustainable natural gas for many decades,” noted Leonid Mikhelson, NOVATEK’s Chairman of the Management Board. “The Chinese market is one of the key regions in our LNG marketing strategy, and we plan to further increase our supplies of liquefied natural gas to this country.”

Arctic LNG 2

The project includes the construction of three LNG trains, with a capacity of 6.6 mtpa of LNG each, and at least 1.6 mtpa of stable gas condensate. The total LNG capacity of the three trains will be 19.8 mtpa. The project employs an innovative construction concept using gravity-based structures (GBS). OOO Arctic LNG 2 is the operator and owner of all the assets.

The Utrenneye field is the resource base for Arctic LNG 2. The field is located in the Gydan Peninsula in YNAO approximately 70 km across the Ob Bay from Yamal LNG.

In 2018, we completed the front-end engineering design (FEED) and started site preparation, construction of early phase power supply facilities, production wells drilling, and construction of the quayside.

The participants of Arctic LNG 2 approved a final investment decision (FID) for the project in September 2019. Capital expenditures to launch the project at full capacity is estimated at $21.3 billion equivalent.

The GBS design concept as well as extensive localization of equipment and materials manufacturing in Russia will allow to considerably decrease the CAPEX per ton of LNG produced under this project. This will ensure a low cost structure of products and maximum competitiveness across the LNG markets.

KeyFacts Energy: NOVATEK Russia country profile