Novatek Announces Investment in Locally-equipped LNG Plant

Russian private gas producer Novatek is planning to adopt an investment decision on a new liquefied natural gas (LNG) project in 2019, the company told Kommersant.

Novatek, which already operates the Yamal LNG terminal and is building Arctic LNG 2, said it is generally set on the project and plans to invest around $5 billion. It will be a small plant with a capacity of 4.8 million tons of LNG per year based on Russian equipment and technology located in Sabetta. The company will be able to launch the plant at full capacity in the mid-2023.

The project’s key feature is that it will be implemented using Russian equipment and Russian liquefaction technology in its entirety. At the same time, sources told Kommersant that the Russian equipment is around 50% cheaper than its foreign equivalents.

“The project’s details and deadlines are preliminary and intended for receiving offers from potential Russian suppliers and contractors,” Novatek told the business newspaper.

This year, Novatek is expected to introduce the first line on Russian equipment for 0.9 mlntonnes in the framework of Yamal LNG. The unit cost of it is $500 per ton against $1,100 on the “large lines” of Yamal LNG.

“It is reasonable to assume that the specific cost of liquefaction will not be significantly higher than the one on the Arctic LNG 2, otherwise the selection of small line concepts seems meaningless,” a source told Kommersant.

According to the newspaper, the cost of the entire project 4.8 million-ton project may amount to around $5 billion.