Yamal LNG, CNPC Sign LNG Supply Deal

Yamal LNG on Tuesday signed a 20 year deal with China National Petroleum Corporation (CNPC) to supply three million tons of LNG per annum.

“Final consolidation of the long-term agreements on gas supplies from the Yamal Peninsula to one of the fastest growing energy markets in the world will provide a solid basis for the mutually beneficial cooperation and further development of relations with our Chinese partners, enabling them to increase the share of “clean” fuel in the energy balance of China,” Chairman of the Management Board of Novatek, the major shareholder of Yamal LNG, Leonid V. Mikhelson said in Shanghai at the signing ceremony.

LNG price is indexed to the Japanese Crude Cocktail.

Along with the LNG supply agreement, China Development Bank Corporation, Vnesheconombank (VEB), Gazprombank and Yamal LNG signed a memorandum on project financing for the Yamal LNG project.

According to the memorandum, the parties will make efforts to achieve the closing of the project financing in the fourth quarter 2014 on the best possible terms.

China Development Bank Corporation will be the general coordinator for the Chinese financial institutions and will use its best efforts to secure financing from the Chinese banks for a tenor of up to 15 years.

In addition, VEB and Gazprombank confirmed their intent to participate in the financing of the project.

The Yamal LNG Project envisages the construction of a LNG plant with a capacity of 16.5 MTPA based on the hydrocarbon resources of the South-Tambeyskoye field. As of end of 2013, the field’s proved and probable gas reserves are estimated at 927 billion cubic meters.

Yamal LNG shareholders are Novatek (60%), Total (20%) and CNPC (20%).