Russia’s Novatek, developer of the Arctic LNG II project, has sealed two LNG supply accords with the global commodity trader Glencore and China’s Zhejiang Energy Gas Group. The accord with Zhejiang sets out the commercial terms for up to 1 million tons of Arctic LNG for a period of 15 years.
The LNG will be delivered on an ex-ship (DES) basis on Novatek ships to Zhejiang Energy's planned new gas-fired power generation units in China. “The heads of agreement is consistent with our commercial LNG strategy to diversify our client base and target end-consumers in the rapidly developing Asian Pacific market,” said Novatek CEO Leonid Mikhelson.
A second Heads of Agreement was signed with an affiliate of London-listed Glencore Plc for 500,000 tonnes per annum of Arctic LNG. Novatek said the Glencore volumes would be delivered to a number of locations in East Asia.
“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,” Mikhelson commented.
Novatek holds 60% of the Arctic LNG II project, under construction on the Gydan Peninsula at a cost $21 billion. The plant will produce 19.8 million tonnes per annum (mtpa) of LNG as well as gas concentrate from the principal feed-gas resources, adding to Yamal LNG’s output of 17.5 mtpa.
The LNG sales from Arctic LNG II’s first liquefaction Train are scheduled to commence in 2023.