Russian natural gas company Novatek wins North-Gydanskiy licence in Gydan Bay area for Arctic LNG

Thursday, 25 March 2021
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Russian natural gas company and liquefied natural gas developer Novatek said it won an auction for exploration and production rights in the North-Gydanskiy licence area located in the Yamal-Nenets Autonomous Region of the Gydan Peninsula and partly in the shallow waters of Gydan Bay in the Kara Sea.

“The North-Gydanskiy licence area has estimated hydrocarbon resources of 9.8 billion barrels of oil equivalent according to the Russian resource classification system,” said Novatek.

The licence term is 30 years and the auction resulted in a one-time payment for the licence of 775.4 million Russian roubles ($10.3M) by Novatek.

“The new licence area borders Novatek’s existing assets on the Gydan Peninsula and expands the company’s resource base for implementing new LNG projects,” explained the company.

Novatek owns the existing Yamal LNG export plant and is constructing the Arctic LNG project on the Gydan Peninsula.

Arctic LNG II will produce 19.8 million tonnes per annum of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas fields, adding to the existing Yamal facility’s annual output of 17.5 MTPA.

The Russian company holds 60 percent of the Arctic LNG II project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corp.

In its most recent earnings Novatek reported declines in annual revenues and profits because of the adverse effects of Covid-19 for much of 2020 and the impact of a weaker Russian rouble.

Novatek said its total gross revenues in 2020, including stakes in joint ventures, dropped by 17.5 percent to 711.8 billion roubles ($9.6Bln), and its gross profits fell 15 percent to 392.0Bln roubles ($5.3Bln).

This was largely due to a decline in global commodity prices for hydrocarbons while Novatek also reported a fall in its own LNG sales volumes on international markets.

Profits attributable to Novatek shareholders came to 169Bln roubles ($2.28Bln), excluding the effects of foreign exchange losses, down from 245.0Bln roubles ($3.3Bln) in 2019.

When counting foreign exchange losses, Novatek’s annual net income came to 67.8Bln roubles ($907 million), even as its output of natural gas increased.

Novatek’s natural gas production including its proportionate share in the production of joint ventures increased by 3.6 percent compared with 2019.

The natural gas output in 2020 amounted to 77.36 billion cubic metres, up from 74.70 Bcm in 2019.

Novatek’s own equity sales on international markets as LNG declined to 8.92 Bcm from 12.79 Bcm in 2019.

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