August 3, 2021

Gas: Novatek launches its second mega project in the Arctic with Total

Posted on Sep 5, 2019 at 6:03 PMUpdated Sep 5, 2019, 6:12 PM

Leonid Mikhelson’s new liquefied natural gas (LNG) mega project is taking shape. The boss of Novatek, number two in gas in Russia after Gazprom, the first private gas group but above all a giant in LNG in the Arctic, announced on Thursday the finalization of the financing of Arctic LNG 2, a project estimated at more than 21 billion euros. dollars. With a first cargo ship scheduled for 2023.

The final investment decision was approved by the project partners around Novatek. By Total, a 10% shareholder who also owns 19.4% of Novatek’s capital. But also by the Chinese CNOOC (10%) and CNPC (10%) as well as by the Japanese consortium Mitsui-Jogmec (10%). As expected, Novatek remains in the majority with 60%.

World number four

“Novatek has become one of the key players in the global LNG market. Today, we are taking a new step ”, welcomed Leonid Mikhelson who, admittedly discreet about the details of the financing methods of the project, relishes his victory for having imposed it, especially in the face of the initial skepticism of the giant Gazprom. It is launching Arctic LNG 2 after starting production at the end of 2017 of its first huge $ 27 billion liquefaction plant on the Yamal peninsula, neighboring the Gydan peninsula where the second project is located.

It will be the third LNG plant in Russia. The federation is the world number two in gas, behind the United States, but most of the production is currently exported by Gazprom in gaseous form, by pipeline. In LNG, which is growing much faster to supply Asia, Russia is only number four, far behind Qatar, Australia and the United States. Thanks to projects like Novatek’s, Russia’s market share is expected to double by 2040 to 8%, Cedigaz predicts.

Siemens and TechnipFMC

In northern Siberia, the two factories are about thirty kilometers from each other. The Arctic LNG 2 site must therefore take advantage of the heavy infrastructure already in place for Yamal (a port and an airport in particular). The second plant is to achieve a production capacity of nearly 20 million tonnes per year, drawing on more than 7 billion barrels of oil equivalent of gas reserves.

The main calls for tenders have already been concluded. Siemens was one of the first to sign a contract for the supply of compression equipment on the future three liquefaction lines. The Franco-American TechnipFMC then won the contract for the engineering, the supply of equipment and the construction of these three LNG trains which, originality of the project, will be installed on three concrete gravity platforms and must be launched respectively in 2023, 2024 and 2026.

« Russifier » la production

TechnipFMC is in fact part of a larger consortium with Saipem and the Russian company NIPIGAS. The design of these floating platforms, a true technological innovation, is underway near Murmansk in a new project launched by Novatek. The Russian group wants to “Russify” the factory more than for Yamal, with up to 70% local content. This new technology should make it possible to avoid logistics costs and large investments in infrastructure, the group thus counting on a 30% reduction in costs compared to Yamal.