Novatek, Glencore Ink Arctic LNG 2 Gas Supply Deal

Russian gas company Novatek has signed heads of agreement with Glencore for the long-term supply of LNG from the Arctic LNG 2 project.

The agreement, signed Wednesday at Saint-Petersburg International Economic Forum, established the key commercial terms for the long-term supply of more than of 0.5 million tons of LNG per year from the Arctic LNG 2 project. 

The LNG will be delivered to a number of locations in East Asia, Novatek said.

Leonid Mikhelson, NOVATEK's Chairman of the Management Board said: "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.

"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."

The $21.3 billion Arctic LNG 2 project, sanctioned in 2019, will develop the Utrenneye field on the Gydan Peninsula.

The Arctic LNG 2 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 a cumulative gas condensate production capacity of 1.6 million tons per annum. 

The project will use an innovative construction concept of offshore 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, a consortium of Mitsui & Co, Ltd. and JOGMEC (10%).

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