LNG

Novatek, the Russian natural gas company and operator of the Yamal LNG export plant and developer of Arctic LNG II currently still under threat from Western sanctions imposed because of the Ukraine invasion, has reported operating data for the first quarter of 2023 as it continued to supply cargoes to the European Union.

Novatek, the Russian energy company and developer of the Arctic LNG II project to double up on the existing Yamal LNG plant, said it was still on track for the first Train to come on stream by year-end 2023 and Japan and China would be key customers.

Novatek, the Russian natural gas company and operator of the Yamal LNG export plant and developer of Arctic LNG II currently under threat from Western sanctions imposed because of the Ukraine invasion, said LNG cargoes sold on international markets fell in the second quarter.

Technip Energies, the leading energy and LNG project company with contracts at leading global ventures including in Arctic Russia, offshore Africa and in Mexico, reported a jump in first-quarter revenues and profits.

TotalEnergies, the leading European oil and gas company and liquefied natural gas developer in Africa and elsewhere, has been forced to defend itself against wild allegations over its business role in Russian LNG and energy.

Novatek, the Russian natural gas company and operator of Yamal LNG and the developer of the Arctic LNG II project, reported a more than six-fold rise in annual net profits as global prices soared and storage levels dropped.

The Moscow-based company posted 432.9 billion Russian roubles ($5.7 billion) of profits attributable to shareholders compared with 67.8Bln roubles ($893 million) of profits in the previous year.

Novatek is the largest independent natural gas producer in Russia and started up the Yamal LNG export plant in northern Siberia in 2017 to supply Europe and Asia and is currently building the second LNG joint venture on the Gydan Peninsula.

The company, listed on the Moscow and London stock exchanges, said total revenues and normalized gross income, including its share of joint ventures, amounted to 1,156.7 billion roubles ($15.23Bln) and 748.3Bln roubles ($9.85Bln), representing increases of 62.5 percent and 90.9 percent respectively compared with 2020.

Its upstream activities are concentrated in joint ventures in the prolific Yamal-Nenets Region, the world’s largest natural gas producing area, accounting for about 80 percent of Russia’s gas production and around 15 percent of the world’s gas output.

Price rises

“The increases in total revenues and normalized EBITDA were largely due to an increase in global commodity prices for hydrocarbons, as well as the launch of gas condensate deposits within the fields of the North-Russkiy cluster,” said Novatek.

The company explained that European and Asian natural gas markets were impacted by faster than expected recovery of demand after the Covid-19 pandemic, the declared energy transition policy, as well as weather factors and supply disruptions.

“All this caused storage level reductions in key consuming regions and a strong price rally in the second half of 2021,” it added.

Novatek’s natural gas sales volumes totaled 75.8 billion cubic metres, representing a marginal increase of 0.3 percent compared with 2020, though global prices soared.

“An increase in natural gas volumes sold on the domestic market completely offset a decline in natural gas volumes sold on the international markets,” explained the company.

“The increase in natural gas volumes sold on the domestic market resulted from the launch of additional production facilities, as well as higher demand from end-customers due to weather conditions,” added Novatek.

“The decline in natural gas volumes sold on the international markets was due to a decrease in LNG sales volumes purchased primarily from our joint venture OAO Yamal LNG, as a result of an increase in the share of Yamal LNG’s direct LNG sales under long-term contracts and the corresponding decrease in LNG spot sales to shareholders, including the Group,” it stated.

The Moscow-based company produces and sells LNG, crude oil, domestic natural gas, liquefied petroleum gas and other petroleum products.

Novatek’s total hydrocarbon production increased to 626.3 million barrels of oil equivalent from 608.2 million boe in the previous year.

Total production amounted to 1.72 million boe per day versus 1.66M boe per day in 2020.

French liquefied natural gas storage technology firm Gaztranzport and Technigaz (GTT) and its South Korean shipyard partner Daewoo Shipbuilding and Marine Engineering received an order for the tank design of four new LNG carriers on behalf of the Japanese ship-owner Mitsui OSK Lines.

Arctic LNG II project developer Novatek hosted a forum for contractors and suppliers, attended by more than 160 companies, to keep the venture on track for a 2024 start-up and to expand cooperation at the Novatek LNG Construction Centre at Belokamenk in the Murmansk region of northern Russia.

Novatek, the operator of the Yamal LNG plant in Arctic Russian and developer of the Arctic LNG II joint venture, has won the auctions for two subsoil licence areas, including the Arkticheskoye and Neytinskoye gas fields on the Yamal Peninsula in the Yamal-Nenets Autonomous Region of Northern Siberia.

Novatek’s bidding was carried out by the wholly owned subsidiary Yamal LNG Resources.

The Arkticheskoye and Neytinskoye fields have combined estimated hydrocarbon reserves of 2.9 billion barrels of oil equivalent, including 413 billion cubic metres of natural gas and 28 million tons of liquids, according to the Russian hydrocarbon classification system.

The licence terms are for 27 years and resulted in cumulative one-time payments for the subsoil use of 13.15 billion Russian roubles ($180 million).

“The new licence areas are located in close proximity to Novatek’s existing assets on the Yamal Peninsula and expand the company’s resource base for implementing LNG projects,” said Novatek.

The current Yamal LNG feed gas comes mainly from the South Tambey (Tambeyskoye) gas field, located near the port of Sabetta on the Yamal Peninsula.

South Tambey contains 72 commercially viable gas layers, including 33 shallow dry gas layers and 28 deeper gas layers. The depth of these layers varies from 900 metres to 2,850m.

This means the new fields to be developed in the future will not need to come in stream for about 15 to 20 years to supply Yamal LNG, though another project could be developed from the resources.

Reserves

The South Tambey field’s estimated reserves stand at 44 trillion cubic feet of gas and 550 million barrels of condensate, while the proven reserves stand at 1.26 Tcf of gas and 51.6MT of gas condensate.

South Tambey is capable of producing up to 27 Bcm of natural gas a year over 20 years.

A total of over 200 directional production wells are planned to be drilled for the full development of the field.

Novatek’s upstream activities and LNG projects are concentrated mainly in the prolific Yamal-Nenets region, which is the world’s largest natural gas producing area, accounting for around 80 percent of Russia’s gas output.

The existing Novatek Yamal LNG facility has annual output of over 18 million tonnes power annum

The company also expects that all three liquefaction Trains at the Arctic LNG II plant will come on stream on the Gydan Peninsula in a two-year time span from 2023.

The start-up of the first Arctic LNG II Train is planned for 2023, the second in 2024 and the third Train in 2025.

Arctic LNG II will produce 19.8 million tonnes per annum of LNG from the principal feed-gas resources, the Utrenneye gas fields.

The new Arctic plant involves the installation of three gravity-based structures in the Gulf of Ob and related LNG storage facilities of a combined 687,000 cubic metres capacity.

Novatek is the largest independent natural gas producer in Russia and is second only to Gazprom.

The Arctic LNG export project under construction on the Gydan Peninsula in northern Siberia will benefit from a new airport that as just come into service to speed-up the transportation of material and engineering personnel to the work sites.