Russia’s Novatek Raises LNG Ambitions

Russian independent Novatek is expanding LNG capacity and plans to revise its 2030 production target, CEO Leonid Mikhelson told Russian President Vladimir Putin February 26, according to the Kremlin.

“For now, Novatek plans to produce 57mn mt/yr LNG by 2030, but in a year or two we hope to revise the plan and target 70mn mt/yr capacity,” the Novatek chief told Putin.

The development of the Arctic LNG 2 project is the main plank in Novatek’s ambitions. Touching upon the completion of all three trains of Yamal LNG with 16.5mn mt/y capacity in 2018, Mikhelson said that the development plan of Arctic LNG 2, with 19.8mn mt/y, has already started.

The Russian company recently signed several contracts with Germany’s Siemens, Italy's Nuovo Pignone and Saipem to develop Arctic LNG 2, which is located in the western part of the Gydan Peninsula, close to its existing Yamal LNG facilities. The project is expected to become operational by 2022-2023.

The deals are subjected to Novatek taking a final investment decision on the project. The shareholder structure is also yet to be determined, with various Japanese and Indian firms, and even Saudi Aramco, being mooted as possible partners.

Novatek transferred 40% in the project to wholly owned subsidiary Ekropromstroy in September 2018. That stake could be sold. French Total, which holds a 19% stake in Novatek itself, has expressed an interest in at least 10% of any future Novatek-led LNG export projects.

Mikhelson also noted that Novatek will start operations at a new mini-LNG plant with 600,000 mt/yr capacity in the Leningrad Region next month. During 2020, two new trains will be added to this plant to bring its final capacity to 1.8mn mt/y.