Novatek and its partners on Thursday took the final investment decision on the $21.3 billion Arctic LNG 2 project, with first liquefied natural gas deliveries expected in 2023, Kallanish Energy reports.
The project will produce 19.8 million tonnes per annum (Mtpa) of LNG through three trains. The second and third trains will be launched in 2024 and 2026, respectively. Gas from the onshore Utrenneye field will be processed offshore, using an innovative concept known as gravity-based structures.
“Novatek has emerged as one of the key players of the global LNG market with the successful launch of Yamal LNG,” CEO Leonid Mikhelson said in a statement. “Today, we have taken another step forward in our goal to become one of the largest LNG producers in the world by approving the final investment decision on our second large-scale LNG project – Arctic LNG 2.”
The independent LNG producer seeks to hold 10% of the global LNG market in a decade, and is planning future projects in the Russian Arctic region. The ambition will also help Russia to boost its share of the global LNG market from 8% last year to 20% by 2035.
“This FID brings Novatek closer to its long-term strategy of maximising cost competitiveness across LNG markets and becoming a global LNG player,” said Wood Mackenzie analyst Nikolai Novikov, adding the company keeps delivering on its promises.
Project moving fast
Preparations for Arctic LNG 2 are progressing fast, with drilling of wells and construction of roads and field’s production infrastructure already commenced. Over 90% of long-lead items (including cryogenic heat exchangers, gas turbines and the compressors for the liquefaction trains) have been ordered.
The firm “played the safety card by ordering the topside modules for Train 1 at Chinese yards,” noted Novikov. “Next steps will be contracting the remaining equipment, finalising the financing structure and deciding if it wants to attract a last partner in the project.”
Partners in the project have long-term LNG offtake in proportion to their shareholding – Novatek 60%, Total 10%, CNPC 10%, CNOOC 10%, and the Japan Arctic LNG consortium (Mitsui and Jogmec) 10%.
Speaking after the announcement, Japan’s economy minister Hiroshige Seko said: that “the Arctic LNG 2, based on its costs, is the largest project in the history of Japanese-Russian relations.”
This post appeared first on Kallanish Energy News.