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NOVATEK and Zhejiang Energy Sign Heads of Agreement on LNG Supply

Saint-Petersburg, 2 June 2021. PAO NOVATEK (“NOVATEK” and/or the “Company”) announced that as part of today’s Saint-Petersburg International Economic Forum, its wholly owned subsidiary, NOVATEK Gas & Power Asia Pte. Ltd., and Zhejiang Energy Gas Group Co., Ltd, a subsidiary of the Zhejiang Provincial Energy Group (“Zhejiang Energy”) signed a Heads of Agreement (“Agreement”) for the long-term supply of LNG from the Arctic LNG 2 project.
 
The Agreement builds on the MOU signed by the parties in October 2019 and establishes the key commercial terms for the annual supply of up to one (1) million tons of LNG from the Arctic LNG 2 project for a term of 15 years. The LNG will be delivered on a DES basis to Zhejiang Energy’s LNG terminals in China, including feedstock for the buyer's new gas-fired power generation facilities.
 
“The agreement is consistent with our commercial LNG strategy to diversify our client base and target end consumers in the rapidly developing Asian Pacific market,” noted Leonid Mikhelson, NOVATEK’s Chairman of the Management Board. “The fast-growing Chinese market is a key region in our LNG marketing strategy, and we plan to further increase our supplies of cleaner-burning LNG to assist China in reaching its net zero targets by 2060.”
 
Note:
 
Arctic LNG 2 (or the “Project”) envisages constructing three LNG liquefaction trains of 6.6 million tons per annum each for the total LNG capacity of 19.8 million tons, as well as cumulative gas condensate production capacity of 1.6 million tons per annum. The Project will utilize an innovative construction concept of gravity-based structure (GBS) platforms to reduce overall capital cost and minimize the Project’s environmental footprint in the Arctic zone of Russia. As of 31 December 2020, the Utrenneye field’s 2P reserves under PRMS totaled 1,434 billion cubic meters of natural gas and 90 million tons of liquids.

The Project’s participants include: NOVATEK (60%), TotalEnergies (10%), CNPC (10%), CNOOC (10%) and the Japan Arctic LNG, consortium of Mitsui & Co, Ltd. and JOGMEC (10%).

 


PAO NOVATEK is the largest independent natural gas producer in Russia, and in 2017, entered the global LNG market by successfully launching the Yamal LNG project. Founded in 1994, the Company is engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons. The Company’s upstream activities are concentrated mainly in the prolific Yamal-Nenets Autonomous Region, which is the world’s largest natural gas producing area and accounts for approximately 80% of Russia’s natural gas production and approximately 15% of the world’s gas production. NOVATEK is a public joint stock company established under the laws of the Russian Federation. The Company’s shares are listed in Russia on Moscow Exchange (MOEX) and the London Stock Exchange (LSE) under the ticker symbol “NVTK”.