Russian LNG producer Novatek reports operating result with Western sanctions still delaying Arctic LNG II
Novatek, the Russian natural gas company and operator of the Yamal LNG export plant and developer of the delayed Arctic LNG II venture, has reported positive operating data for the second quarter of 2024 amid continued Western sanctions.
Russian gas forecasts
April 29 (LNGJ) - Russian natural gas production is expected to increase by 4.6 percent in 2024 to 666.7 billion cubic metres, while pipeline gas exports are forecast to rise by 7 percent to 108 Bcm. Russia’s Non-Commonwealth of Independent States natural gas prices for nations such as China and Turkey are expected to be at the level of around $297.3 per 1,000 cubic metres in 2024.
The official Russian data said that LNG exports are forecast to grow by 14 percent to 38 million tonnes in 2024, though no provision is included in the data for tougher sanctions against Russian LNG currently being considered by the European Union. “Gas production is expected to continue growing to 695.4 Bcm in 2025 and pipeline gas exports will grow to 120 Bcm in 2025,” the report said.
Russian LNG producer Novatek reports results affected by Ukraine drone attack and delays in Arctic LNG II project
Novatek, the Russian natural gas company and operator of the Yamal LNG export plant and developer of the delayed Arctic LNG II facility hit by Western sanctions on equipment imposed because of the Ukraine invasion, has reported operational results for the first quarter of 2024 as it continued to supply LNG cargoes to the European Union.
Novatek’s results statement showed it had resumed full production at the Ust-Luga complex, the huge Baltic Sea fuel export terminal and condensate processing plant that was damaged by fire on January 21, 2024, after reportedly being the subject of a Ukrainian drone attack.
Novatek resumed gas condensate processing at its Ust-Luga complex on February 11 after fire damage was repaired.
The company said it processed 1.4MT of stable gas condensate at the previously damaged Ust-Luga facility during the first quarter of 2024, which was 22 percent lower compared with the first three months of 2023 when 1.8MT was processed.
Natural gas sales
Novatek’s first-quarter 2024 total natural gas sales volumes to the end of March, including LNG, amounted to 21.47 billion cubic metres, a decrease of 3.8 percent compared with the same three months of 2023 when the total was 22.33 Bcm.
Novatek said its hydrocarbon production totaled 167.4 million barrels of oil equivalent, including 21.12 Bcm of natural gas and 3.5 million tons of liquids comprising gas condensate and crude oil.
This represented an increase of almost 2.5 percent in total hydrocarbons production compared with the first quarter of 2023 when the total was 163.9 million boe.
Novatek said it processed 3.3 million tonnes of unstable gas condensate at the Purovsky Processing Plant, which was 2.8 percent less than the 3.4MT processed in the prior-year quarter.
Preliminary total sales volumes of liquid hydrocarbons amounted to 4.3MT, which was 11 percent higher than in the first quarter of 2023.
Yamal cargoes
Novatek added that it had 0.2 Bcm of natural gas, including LNG, and 1.2MT of stable gas condensate and petroleum products in storage or transit and these were recognized as inventory.
Cargoes from the Yamal plant in the Russian Arctic are still being unloaded in EU nations with the UK being the only LNG importer in Western Europe to formally ban LNG from Russia.
The main EU destinations for Yamal LNG in the first quarter of 2024 have been Belgium, France and Spain.
LNG production started in December 2023 at the first Train at the Arctic LNG II project on the Gydan Peninsula on the Gulf of Ob, though Novatek has failed to ship any cargoes so far after reported problems with the liquefaction processing.
The second and third liquefaction Trains were now delayed as well and are scheduled to begin operations in 2025.
The Arctic LNG II Trains and facilities are being pre-built at a fabrication yard in the Murmansk region of Russia onboard gravity-based structures and are being towed to the Gydan Peninsula project site.
Each Arctic LNG II liquefaction Train installed on the platforms will have production capacity of 6.6 million tonnes per annum to total almost 20 MTPA in nameplate capacity.
During 2023 a total of around 90 gas wells were completed at the Utrenneye gas field to provide feed gas for Arctic LNG II.
Gazprom resumes flows on ‘Power of Siberia’ pipeline after maintenance amid expansion plan to offset LNG needs
Russian natural gas company Gazprom said flows to China on the “Power of Siberia” pipeline have resumed after scheduled maintenance, offsetting the need for higher LNG imports during the Northern Hemisphere summer season.
US ratings agency Moody’s forecasts rise in Chinese LNG imports and European gas markets to remain volatile
Moody’s Investors Service, the US ratings agency, said in a report into liquefied natural gas that Chinese demand in 2024 will be similar to last year and while European gas markets remained resilient the region’s reliance on LNG could increase price volatility.
European Union LNG imports from Russia remain steady but may rise when second Arctic plant comes on stream
The European Union reduced imports of pipeline gas from Russia five-fold in 2023, while its purchases of Russian liquefied natural gas cargoes increased by around 38 percent from the Novatek-operated Yamal export plant in Northern Siberia and could rise further in 2024.
Largest Russian LNG producer Novatek reports fire damage at fuel plant on Baltic Coast caused by attack
A fire apparently caused by a drone attack broke out at a Baltic Sea fuel terminal in Russia owned by the largest Russian liquefied natural gas producer Novatek.
“There were no casualties as a result of the fire at the Novatek terminal in the port of Ust-Luga and the personnel were evacuated,” said a statement from the authorities in the Ust-Luga area near the Gulf of Finland and called the Leningrad region.
The Ust-Luga complex is located about 170 kilometres (105 miles) west of the city of St. Petersburg and processes stable gas condensate.
This is a very light oil obtained by separation from natural gas during production and during distillation the condensate at Uist-Luga produces fuels such as heavy naphtha, jet fuel, fuel oil and gasoil..
Novatek in addition to the Ust-Luga complex also owns the Yamal LNG export plant that still ships cargoes to Western Europe and China from the Yamal Peninsula in Arctic Russia.
Condensate
Novatek said in its most recent earnings statement on January 17, 2024, that the volume of condensate handled at the complex in Ust-Luga rose by 0.4 percent to 7 million tonnes.
Russian news agencies reported that two storage tanks and a pumping station had been damaged at Ust-Luga but that a fire had been brought under control with no one was reported injured.
Novatek said in a statement it had suspended some operations after the fire which it said was the result of “external influences”.
Novatek added that the production process at Novatek-Ust-Luga has been suspended and a damage assessment process had started.
Analysts note that Russia and Ukraine have been targeting each other’s energy infrastructure in drone strikes designed to disrupt supply lines and logistics since the conflict began in February 2022 after Russia invaded Ukraine.
The Ust-Luga port area was also well known for its connections to the former Gazprom-operated natural gas Nord Stream pipelines that are no longer in operation.
Nord Stream gas
The Nord Stream pipelines were ruptured in September 2022 in still unexplained sabotage attacks that halted all Russian pipeline gas exports to Germany and the European Union.
The Nord Stream II pipeline bypassed EU members Poland and Lithuania, as well as the traditional pipeline transit nation of Ukraine on its 1,200-kilometres route from Ust-Luga to Greifswald near the Baltic port of Lubmin in northeast Germany and carried 55 billion cubic metres of gas.
The other main Gazprom gas pipeline export route to Germany was the Nord Stream I pipeline which ran from Vyborg port in northwest Russia to the same German landfall near Lubmin, which is now the site of a German LNG import terminal.
Russian LNG exports to Europe and Asia decline slightly while Russia’s oil deliveries are still much in demand
Exports of Russian liquefied natural gas cargoes from the Yamal plant in northern Siberia and the Sakhalin plant in Russia’s Far East declined only slightly in the past year as Moscow also adapted its oil export policies under the OPEC+ regime as well as to cope with Western sanctions over Ukraine.
Russian developer of Arctic LNG II project to delay cargo supplies to several contract holders based in China
Novatek, the Russian developer of the Arctic LNG II project on the Gydan Peninsula, has declared “force majeure” to some of the buyers of cargoes based in China because of delays in the start-up of the facility.
Gazprom and China's CNPC meet in Beijing to formalise pipeline volumes and technical accord amid LNG surge
Gazprom, the Russian pipeline gas and LNG provider looking for other markets after being frozen out of the West over the Ukraine invasion, said it had significantly increased pipeline flows to China National Petroleum Corp. (CNPC) in line with existing supplemental agreement.
