The cost of the project is estimated at $27 billion. Source: RIA Novosti
Russian natural gas producer Novatek has sold 3 million tons of liquefied natural gas (LNG) from its Yamal LNG plant, which is still under construction to a Gazprom trading company.More than 90 percent of the gas to be produced at the plant has already been sold.
A full-fledged agreement between Gazprom Marketing & Trading and Novatek will be signed in the near future and is expected to be valid for 20 years. Most of the gas is destined for India.
“We think that the Indian market is one of the fastest developing markets in this [Asia-Pacific] region,” Gazprom chairman Alexei Miller said. No indication was given of when deliveries would begin, but analysts are looking at 2017.
The Yamal LNG project involves the construction of a liquefying plant for gas extracted from the Yuzhno-Tambeisk natural gas field, which has estimated reserves of 907 billion cubic meters.
The shareholders are Novatek (60 percent), France’s Total (20 percent), and the Chinese company CNPC (20 percent). The cost of the project is estimated at $27 billion, and Chinese banks are prepared to extend $20 billion in financing.
The first phase is due to come online in 2017, and the project’s shareholders are eager to enter the lucrative Asia-Pacific market by 2020, which is when supplies to this region will begin from the United States and Africa.
Gazprom can use the gas from Yamal to supply the 2.5 million tons that is contracted to Indian natural gas processing and distribution company GAIL. By supplying Yamal LNG to GAIL, Gazprom could free up the 1 million tons from Sakhalin-2 meant for India and sell it in the Far East.
Novatek co-owner Gennady Timchenko said the company is still prepared to sell up to 9 percent of the project’s stake and that talks are continuing. Until now, the privately-held company has been trying to tempt gas customers to become shareholders, as was the case with Total and CNPC.
Japanese companies Mitsui and Mitsubishi and an Indian consortium comprising of ONGC, Indian Oil Corp, and Petronet LNG were keen on the stake. The Japanese, however, pulled out of talks.
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