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NOVATEK announces its Strategy Update 2009

Moscow, 24 December 2008. OAO NOVATEK (hereinafter «NOVATEK» or the «Company») held its Strategy Update 2009 Conference Call yesterday and provided operational and capital expenditure guidance for 2009 and 2010 as well as discussed the results of the Company’s strategy realization in 2008.

In 2008, NOVATEK launched the second phase of development at the Yurkharovskoye field, thereby increasing the Company’s productive capacity to over 100 million cubic meters per day. In addition, the Company also completed the second phase at its Purovsky Plant increasing the plant’s processing capacity to five million tons per annum. The successful launching of these two key projects is an important step in the Company’s efforts to reach planned production levels and allows the Company to further implement its capital program in 2009–2010.

During the conference call, the Company announced two scenarios for its capital expenditure program taking into account changing market conditions. For 2009, the Company outlined plans to spend between 14.2 billion Russian roubles and 21.8 billion Russian roubles (both net of VAT) to further expand infrastructure and productive capacity at the Yurkharovskoye field, to maintain production levels at other core fields and to continue further exploration activities.

For 2010, the Company tentatively outlined a capital spending program between 28.3 billion Russian roubles and 35.7 billion Russian roubles, both net of VAT, to expand total productive capacity to approximately 50 billion cubic meters per annum.

According to Mr. Mikhelson, «NOVATEK will continue to invest capital in expanding our productive capacity. The Company has the financial resources to undertake our announced capital programs but will continue to monitor the financial and operating environment on both the domestic and international markets and, if necessary, adjust our capital expenditure plan accordingly».

The capital expenditure program in both years will focus on NOVATEK’s core natural gas and gas condensate business segments. Specifically, the Company plans to continue development at the Yurkharovskoye field, including:

  • Increase capacity at the field’s methanol production plant to 40,000 tons per annum;
  • Begin construction of a 326 kilometer gas condensate pipeline connecting the field to the Purovsky Plant;
  • Construction of a gas condensate de-ethanization plant; and
  • Continue work on the 3rd and 4th phases of the field’s development program including, drilling and construction of low temperature separation units for additional capacity of 7 to 14 billion cubic meters per annum.

NOVATEK also plans to expand the LPG storage facilities at the Purovsky Plant and to construct and commission compressor stations at the East-Tarkosalinskoye and Khancheyskoye fields to maintain their current production levels.

The Company will continue exploration work at its prospective fields and license areas and plans to begin exploration drilling in 2010 at the El-Arish field in Egypt.

NOVATEK’s Strategy Update Conference Call presentation can be found on the Company’s website:

PAO NOVATEK is one of the largest independent natural gas producers 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 Area, 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.