NOVATEK and Glencore 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 an affiliate of Glencore Plc (“Glencore’) signed a Heads of Agreement (“Agreement”) for the long-term supply of LNG from the Arctic LNG 2 project.
The Agreement established the key commercial terms for the long-term supply in excess of 0.5 million tons of LNG per annum from the Arctic LNG 2 project. The LNG will be delivered to a number of locations in East Asia.
“The market for LNG in the Asia Pacific region has fully recovered from the impact of the coronavirus pandemic and has now resumed a stable growth phase”, noted Leonid Mikhelson, NOVATEK’s Chairman of the Management Board. “This Agreement is consistent with NOVATEK’s commercial strategy to build a sustainable LNG sales portfolio including both end customers and portfolio players in the Asia Pacific market, with LNG delivered all-year-round along the Northern Sea Route”.
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. Upstream activities of the Company’s subsidiaries and joint ventures 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.