Novatek, the Russian developer of the Yamal LNG project in the Arctic region, has signed an agreement with Gazprom for the establishment of a joint venture to increase LNG production on the Yamal Peninsula and jointly to use the infrastructure.
The agreement defines a schedule for the establishment of the joint venture.
“The joint venture will carry out pre-front end engineering and design studies, elaborate project documents, work out a plan for the LNG plant construction and a joint program for development of the fields where the company will act as an operator for the facilities development and arrangement,” the companies said.
“Until the end of the year it is scheduled to approve a comprehensive program for project implementation, including the main project features and deadlines, as well as the timescale for the final investment decision-making, the financial scheme and the terms of financing,” they added.
In April 2012, Gazprom and Novatek signed a Memorandum of Cooperation, providing for the possibility of establishing a joint venture to increase LNG production capacity at Yamal.
Analysts say Gazprom was always expected to jump on board the Yamal project, given the extent of its own natural gas resources in the same region.
Novatek, the second-largest Russian natural gas producer after Gazprom, is developing its LNG project with France's Total near Sabetta on the Yamal Peninsula in Northern Russia, a location north of the Arctic circle.
The Yamal LNG project consists of the development of production and treatment facilities, an LNG plant with three liquefaction Trains of around 5.5 million tonne per annum of capacity each, storage tanks and a port facility for loading condensates and LNG.
Novatek currently holds an 80 percent stake in Yamal and Total, one of the world's leading LNG producers, owns 20 percent.
Novatek and Total plan to aim for a start-up in 2018.
US LNG engineering company CB&I has carried out a front-end engineering and design study for the Yamal venture and the final investment decision is set for this year.
The developers have already received proposals in the bidding process to award the engineering, procurement and construction contract.
Gazprom's own Shtokman LNG project in Northern Russia is lagging behind the Yamal project in terms of strategy, design plans and time lines.
The Shtokman venture also includes Total and Norwegian energy company Statoil.
