Novatek, Russia’s leading producer of liquefied natural gas (LNG), signed a long-term agreement with Shenergy on Thursday, February 25, 2021. This agreement is part of Novatek’s Arctic LNG 2 project to produce LNG. This project will include 3 LNG liquefaction trains of 6.6 million tons per year each.
Novatek prepares its $21 billion project
Novatek and Shenergy have signed a 15-year LNG supply agreement. Thus, 3 million tons per year should be delivered to China from the Artic LNG 2 project.
This $21 billion project is scheduled for completion in 2023. It should allow the deployment of 3 liquefaction trains (gas cooling) with a combined capacity of 19.8 million tons per year.
Leonid Mikhelson, Chairman of the Board of Directors of Novatek, said:
“(The) volumes of LNG produced from our Arctic LNG 2 project are central to our long-term goal of providing affordable, safe and sustainable natural gas for many decades.”
The project is shared between Novatek (60%), Total (10%), CNPC (10%), CNOOC (10%) and Japan Arctic LNG (10%).
Largest independent producer of natural gas in Russia
Novatek enters the global LNG market in 2017 with the Yamal LNG project. This project covers 80% of Russia’s LNG production. Moreover, this represents 15% of the world production. Today the company is the largest independent producer of natural gas in Russia.
Shenergy, a state-owned enterprise
Shenergy stands out in the market as the first state-owned company in the world to own a receiving LNG terminal. The company is also the main supplier of gas to Shanghai’s financial center (55% of its gas consumption in 2020).
The signing of this agreement will allow Shenergy to secure its operations. However, Asian LNG prices are unstable due to difficult winters and the coronavirus. This source of energy can therefore become very expensive depending on the event.