Novatek wraps up Arctic LNG-2 offtake deals (update)
Russia's Novatek reported on April 28 that it had concluded 20-year LNG sales and purchase deals covering the 19.8mn metric ton/year Arctic LNG-2 terminal's entire production with its partners in the project. And financing has been lined up for some of the project, the company said.
Novatek has a 60% interest in Arctic LNG-2, whose first train is on track to start up in 2023. France's Total and Chinese companies CNPC and CNOOC each have 10%, while the remaining 10% is shared by Japan's Mitsui and Jogmec.
The sales and purchase agreements cover LNG supplies from Arctic LNG-2 on free-on-board Murmansk and free-on-board Kamchatka bases, with pricing formulas linked to international oil and gas benchmarks.
"The long-term offtake agreements between Arctic LNG-2 and its participants ensure the future revenue stream from LNG sales and de-risks the project," Novatek chairman Leonid Mikhelson said. "This represents one of the most important milestones in attracting the project’s external financing that will be completed in 2021."
Novatek reported separately on April 28 that Total had signed a heads of agreement to take a 10% interest in the two LNG transshipment complexes that it is developing in Kamchatka and Murmansk.
The facilities, each equipped with 360,000-m3 floating LNG storage units, are designed to facilitate LNG supplies from the 17mn metric ton/year Yamal LNG and the other LNG export terminals Novatek is developing in the Arctic to markets in Asia and Europe. Specialised ice-breaking LNG carriers will offload their cargoes at the terminals, which will be then be collected by conventional tankers, saving time and cost.
Novatek deputy chairman Mark Gyetvay said in an earnings call in February that the facilities were still on track to start operations in 2023, coinciding with Arctic LNG-2's launch.
Partners sign loan agreement
The same day, Arctic LNG-2 signed agreement with a syndicate of Russian banks – Sberbank, Gazprombank and its subsidiary Bank GPB International, State Development Corporation VEB.RF and the Bank Otkritie Financial Corporation – for a 15-year credit line facility for the total loan amount of €3.11 ($3.76)bn. The loan is part of the external financing package for the project.