LNG

French energy major TotalEnergies said it was assessing the possible impact of US sanctions on the Arctic LNG II project on the Gydan Peninsula of northern Russia in which it has a direct 10 percent stake and a total interest of 21.5 percent via its shareholding in Russian natural gas company and LNG developer Novatek.

TotalEnergies was a leading player in two Arctic LNG joint ventures and a shareholder in the Novatek company itself as well in the existing Novatek-operated Yamal LNG plant, though announced last year it was looking for ways to pull out after Russia invaded Ukraine in February 2022.

In contrast with other global energy majors like Shell and ExxonMobil Corp. that have cut ties with Russia after its invasion of Ukraine, the French company has held on to several investments, including minority stakes in Yamal LNG and Arctic LNG II.

Before the latest sanctions imposed on November 2 by the US on Russia over the Ukraine invasion, TotalEnergies had said it would honour its gas contracts in Russia as long as there were no sanctions involved.

Consequences

“The consequences of the designation of Arctic LNG 2 as a SDN (special designated nationals) entity by the US authorities on TotalEnergies' contractual commitments to Arctic LNG II are currently being assessed,” said TotalEnergies

The company had previously said in March 2022 it had decided to no longer book proved gas reserves for the Arctic LNG II project nor contribute any more investment capital to the project, which is scheduled to come onstream in the first quarter of 2024.

TotalEnergies booked an impairment of $4.1 billion in its first-quarter earnings of 2022 for Arctic LNG II out of a total of $14.8Bln in Russia-related asset write-downs for all of 2022.

Novatek Chairman Leonid Mikhelson has pledged to bring the Gydan Peninsula liquefaction and export plant on stream in early 2024.

Two liquefaction Trains have already been installed on gravity-based platforms at an LNG assembly yard in the town of Belokamenka in the Murmansk region and have been towed to the site.

Each 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 the first half of 2023 a total of over 80 gas wells were completed at the Utrenneye gas field to provide feed gas for Arctic LNG II.

All three liquefaction Trains at the Arctic LNG II plant were originally scheduled to come on stream in a two-year time span from 2023, though issues with the supply of technology have delayed the start-up.

Basic LNG modules were constructed in China for the liquefaction Trains and the first was delivered back in September 2021 to the Murmansk assembly site.

China modules

The modules were built at the Wison shipyard at Zhoushan in the eastern Chinese province of Zhejiang.

The first Chinese module was delivered to the Murmansk yard in September 2021, five months before the Ukraine invasion.

Novatek controls 60 percent of the Arctic LNG II project and its other remaining active partners out with TotalEnergies are from China and Japan.

They are China National Petroleum Corp., China National Offshore Oil Corp. and a consortium comprising Japanese companies, including Japan's Mitsui & Co. and the Japan Organization for Metals and Energy Security, previously known as JOGMEC.

All the shareholders in the project will have offtake. The biggest shareholder Novatek signed sales and purchase agreements in 2022 with two Chinese energy companies, ENN Group and Zhejiang Energy Gas Group.

The Russian company's subsidiary, Novatek Gas and Power Asia, signed a deal with ENN’s trading firm ENN LNG (Singapore) Ltd.

LNG deliveries to ENN will be on a delivered ex-ship (DES) basis whereby Novatek supplies the shipping to ENN’s Zhoushan LNG receiving terminal in eastern China.

Russian natural gas company Novatek has held a ceremony with the Russia’s government to mark the launch of the first modular liquefaction Train onboard a gravity-based structure at an assembly yard in the Murmansk region and set to be towed to the Gydan Peninsula project site on the Gulf of Ob in Western Siberia.

European Union countries have bought a record 8.93 million tonnes of liquefied natural gas cargoes from Russia in the year to April, beating the previous record set through to December 2022 of 8.80MT of shipments.

NextDecade Corp. the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has signed a 15-year sale and purchase agreement (SPA) with Japanese trading house Itochu Corp., its first deal with Japan and its seventh SPA overall.

Under the latest SPA, Itochu will purchase 1.0 million tonnes per annum of LNG indexed to Henry Hub on a free-on-board basis.

Itochu was also one of the three Japanese companies that recently signed deals with Oman LNG on the Arabian Peninsula for 800,000 tonnes per annum of deliveries each.

“We are honored to have Itochu as our first Japanese customer,” said Matt Schatzman, NextDecade's Chairman and Chief Executive.

“We look forward to providing Itochu and their customers with LNG, and we are actively working to reduce the carbon footprint of the Rio Grande LNG facility through our proposed carbon capture and storage project,” added the CEO of the Nasdaq-listed company.

NextDecade had previously signed an increase for the SPA with ENN LNG of Singapore, a trading unit of the Chinese ENN Natural Gas Group.

Supplying China

Under that 10-year SPA, ENN will now purchase 2.0 MTPA of LNG. Several other Chinese companies have signed agreements for volumes from the Rio Grande plant.

The company’s sales volumes will be supplied from the first three Trains at the Rio Grande facility.

Houston, Texas-based NextDecade has ultimate plans and permits to produce up to 27 MTPA of LNG from five liquefaction Trains at the Rio Grande facility.

The Rio Grande project has been delayed several times since 2020 and was originally expected to start producing LNG in 2023.

NextDecade said it was currently targeting a positive final investment decision on the first three Trains during the first quarter of 2023, with FIDs of its remaining Trains to follow thereafter.

NextDecade had other deals signed in December 2022 and in previous months, including one with Galp Trading S.A. of Portugal.

This was its fifth deal of last year and counting the increase of volumes for ENN Group and the latest Itochu agreement to supply Japan, NextDecade has signed a total of seven supply accords.

NextDecade's other SPAs during 2022 included one with ExxonMobil Corp.

The US major signed a 20-year supply deal with NextDecade at the end of July 2022 through its trading subsidiary in Asia.

NextDecade Corp., the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, said it was initiating a private placement of its Nasdaq-listed shares to 10 institutional investors as its proposed venture gathered pace with US and Chinese cargo sales agreements.

Chinese liquefied natural gas imports in July 2022 to its network of 22 regasification terminals declined significantly on a year-on-year basis amid an economic slowdown while shipments from Russia have edged higher since the Ukraine invasion.

NextDecade Corp., the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has signed a third supply agreement with a Chinese company since the start of 2022.

NextDecade Corp., the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has signed a 15-year sale and purchase agreement with French utility Engie as the need for LNG supplies in Europe becomes more urgent.

TotalEnergies, the French major with global LNG stakes, booked an impairment of over $4 billion in its earnings because of the negative impacts of involvement in Russian LNG and particularly the Arctic LNG II project on the Gydan Peninsula.

Cheniere Energy of the US has signed its second LNG supply agreement with a leading Chinese company in November 2021 with a binding 20-year deal with Foran Energy Group, a leading city-gas provider in the southern Guangdong province.