French energy giant Total has announced it has signed final agreements with Novatek for the acquisition of a direct 10% interest in the Russian independent gas producer’s Arctic LNG 2 project, Interfax reports.
The major liquefied natural gas project is in development in Russia’s Gydan Peninsula. The terms of Total’s entry into the project include payment of a 10% interest and the financing of Arctic LNG 2 through capital contributions.
“We are delighted to have concluded the definitive agreements for our entry into this new world-class LNG project based on the vast Russian gas resources alongside our partner Novatek. Arctic LNG 2 builds on the success of Yamal LNG and will introduce several innovative solutions to further increase competitiveness,” said Patrick Pouyanné, Chairman and CEO of Total.
Novatek intends to retain 60% of the project, while Total group’s overall economic interest in the LNG project will be approximately 21.6%. The Russian company intends to sell the rest of the shares in Arctic LNG 2 to foreign investors, with companies from China, Japan, Thailand, and Saudi Arabia being interested. Should Novatek decide to reduce its participation below 60%, Total will have the possibility to increase its direct share up to 15%, according to the agreement.
Novatek and Total also agree that the French company will have the opportunity to acquire a 10 to 15% direct interest in all Novatek’s future LNG projects located on the Yamal and Gydan peninsulas.
“Arctic LNG 2 fits into our strategy of growing our LNG portfolio through competitive developments based on giant low-cost resources primarily destined for the fast-growing Asian markets,” Pouyanné added.
Arctic LNG 2 is planned to produce 19.8 million tons per year (t/y), or 535,000 barrels of oil equivalent per day (boe/d) in the Utrenneye onshore gas and condensate field. The project will involve installation of three gravity-based structures in the Gulf of Ob on which three liquefaction trains of 6.6 Mt/y each will be installed.
The project’s final investment decision is expected to be taken in the second half of 2019, with plans to start up the first liquefaction train in 2023.
