Novatek Sells 2mn Mt/yr from Projects

Russian independent Novatek has signed two contracts, each of 15 years and for 1mn mt/yr, from its Arctic LNG-2 and other projects, it said April 2. One, with Spanish Repsol, is delivery ex-ship and primarily aimed at Spain and Portugal; the other, free on board, basis Kamchatka and Murmansk, is with global commodity trader Vitol.

These are the first contracts linked to the Arctic LNG-2 project, the 19.8mn mt/yr plant to be built on the Gydan Peninsula. There is no Arctic LNG 1 as such; Novatek's first plant is the 16.5mn mt/yr Yamal LNG project which is now fully operational.

Novatek's deputy chairman Lev Feodosyev said the Repsol agreement allowed it to increase its market presence on the Iberian Peninsula where Russian pipeline gas is not supplied. “Expanding our supply geography and diversifying our long-term contract customer base is consistent with the company's strategy to ramp up LNG production in the Russian Arctic.” Russian state Gazprom has the export monopoly for pipeline gas and the two companies are avoiding competition, to preserve the value of their exports.

The Vitol deal by contrast is delivery ex-ship from Novatek's planned transshipment terminals in the Murmansk region and Kamchatka. Fedosyev said: “LNG volumes sold at our transshipment terminals ensures the flexibility of LNG supplies around the world and allows us to create LNG hubs in the Asia-Pacific and Atlantic basins."