Russian Novatek , Sinopec Eye Chinese JV

The visit to Moscow by China's president Xi Jinping was the backdrop to the signing of a heads of agreement between Russia's biggest LNG exporter Novatek, state-owned Gazprombank and Chinese chemicals giant Sinopec to form a gas marketing joint venture. 

Novatek CEO Leonid Mikhelson said that Chinese companies were investing in its "LNG projects in the Arctic region of the Russian Federation. Creating a joint venture to trade LNG and natural gas in the domestic market of China not only facilitates sales of LNG produced, but also opens up opportunities for investments in the development of the end-customer segment in one of the largest and the fastest-growing gas and LNG market in the world. This represents another step in implementing our long-term strategy across the entire value chain from the extraction and liquefaction of natural gas to the sale of LNG to the customers."

As the trade war between China and the US continues, China has imposed tariffs on US LNG, making it more attractive to buy LNG from other countries, such as Russia instead. Gazprombank was among the insitutions hit by US and EU sanctions in 2014, in response to the war in eastern Ukraine and Crimea's declaration of independence from Kiev. Despite its name, it is state owned but not controlled by Gazprom.

Gazprom's pipeline exports to China are due to start up this year, but there have been no announcements of joint marketing activities, the two building a pipeline from opposit directions to their border near Blagoveshchensk.

Novatek is poised to take final investment decision on Arctic LNG-2 this year and to start building the gravity-based structures next month. Yamal LNG is fully functioning with three trains and a fourth, smaller train, is planned. Yamal LNG has Chinese investors.