On February 1st, 2019, in Moscow, O. Fridman, the first deputy chairman of the board of one of Russia’s largest gas companies, PJSC “NOVATEK”, announced the signing of an agreement between PJSC “NOVATEK” and the German technological conglomerate Siemens AG for the supply of nine new gas “Siemens” compressors for the new “Arctic LNG 2” project in Russia, with a capacity of 19.8 million tons of LNG per year (three releases of 6.6 million tons of LNG per year).
O. Fridman noted that Siemens AG will supply equipment for the first and second stage of the “Arctic LNG 2” terminal from Germany. At the same time, the agreement provides for the localization of Siemens equipment manufacturing in Russia for the third stage of “Arctic LNG 2”. In addition, he noted that the construction of gravity platforms for the terminal will be carried out by the Italian company Saipem S.p.A. and the Turkish oil and gas service company Renaissance Heavy Industries (RHI). The agreement valued at USD 2.5 billion was signed on December 18th, 2018. The financial support for the “Arctic LNG 2” project will be provided by the Italian insurance company SACE S.p.A., while the engineering support is performed by the Italian company – Nuovo Pignone S.p.A., an agreement with which was signed by “NOVATEK” on December 21st, 2018.
The resource base of the “Arctic LNG 2” terminal will be “Utryenneye” hydrocarbon deposit field located in Yamalo-Ninezkyi autonomous district of the Russian Federation. Reserves of the deposit field are estimated at 1.98 trillion of cubic meters of gas and 105 million tons of oil. In addition, in October 2018, “NOVATEK” discovered a new marine Arctic hydrocarbon deposit field in the Gulf of Ob, the reserves of which are estimated at 316 billion cubic meters.
O. Fridman noticed that the investment decision on the implementation of the “Arctic LNG 2” project in “NOVATEK” will be made in the first half of 2019, the commissioning of the first stage of the terminal is scheduled for 2023, the second and third stages – for 2024 and 2025 respectively. The cost of the “Arctic LNG 2” project is estimated at USD 25.5 billion.
According to Joe Kaeser, Siemens AG executive director, the partnership with “NOVATEK” is strategic for the German conglomerate. In addition to supplying equipment for the “Arctic LNG 2” project, Siemens AG is interested in developing projects for the construction of small and medium-sized LNG terminals, construction projects for gas-electric and gas-processing enterprises with “NOVATEK”.
It is known that in May 2018, the French energy company Total S.A. acquired 10% shares of the “Arctic LNG 2” project at the expense of USD 2.6 billion. In addition, L. Mikhelson, “NOVATEK” executive Director, noted that “NOVATEK” has already signed a memorandum of understanding with Singapore’s investment company Pavilion Energy Pte Ltd, the Japanese national corporation JOGMEC (“Japan Oil, Gas and Metals National Corporation”) and CNPC (“China National Petroleum Corporation”), which was able to acquire part of the shares in the “Arctic LNG 2” project and reserve a portion of LNG which will be produced by the terminal. According to L. Mikhelson, negotiations with Saudi Arabian national oil and Gas Company “Saudi Aramco”, which is considering purchase of 30% shares in the “Arctic LNG 2” project, are continuing.
It should be noted that “Arctic LNG 2” will become the second export project of “NOVATEK”. In December 2017, “NOVATEK” commissioned the first stage of the terminal, “Yamal LNG” with a total capacity of 16.5 million tons of LNG per year, and in December 2018, the second and third ones. According to L. Mikhelson, the ultimate goal of the company is to create a network of Arctic LNG terminals (“Yamal LNG” and “Arctic LNG 2”) with a combined capacity of 37-40 million tons of LNG per year (or about 50 – 55 billion cubic meters of gas per year).
The result of the efforts of the Russian gas company “NOVATEK” may be the creation of a network of LNG terminals in Western Siberia – a new gas hub with a trading platform, having the potential to influence the formation of gas prices in the Asia-Pacific region along with exchanges in Shanghai, Singapore and Beijing.
Images Zapolyarnoye gas field and Map of Russia from en.wikipedia.org.
