LNG

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.

Novatek, the operator of the Yamal LNG plant and developer of the Arctic LNG II project, said the first three stages of international certification have been obtained for long-term carbon-dioxide underground storage sites on the Yamal and Gydan peninsulas in northern Siberia.

The United Kingdom is expected to receive about half a dozen cargoes of liquefied natural gas in the coming week, including three shipments from the US at the UK port of Milford Haven.

Dec 27 (LNGJ) - The UK is scheduled to receive two New Year LNG shipments, one from Russia and one from the US. The 172,600 cubic metres capacity carrier “Christophe de Margerie” is scheduled to deliver a cargo on January 1 to the UK South Hook terminal at the Welsh port of Milford Haven from the Arctic Yamal plant in northern Siberia, according to shipping data. The US cargo is arriving on January 2 at the adjacent Dragon terminal at Milford Haven in the 174,000 cubic metres capacity vessel “LNG Bonito”. The ship lifted the cargo on December 19 from the Sabine Pass plant in the US state of Louisiana.

Dec 8 (LNGJ) - The 172,000 cubic metres capacity carrier “Yakov Gakkel” is scheduled to discharge a shipment on December 14 at the UK Dragon import terminal in the Welsh port of Milford Haven from the Novatek-operated Arctic Yamal export plant in northern Siberia, according to port authorities.

June 14 (LNGJ) - The “Boris Vilkitsky” with 177,000 cubic metres of capacity is scheduled to deliver a Russian LNG cargo on June 15 to the Isle of Grain LNG import terminal, operated by National Grid Plc, on the Medway-Thames estuary 45 miles southeast of London. The shipment, lifted on June 7 from the Yamal plant in northern Siberia, is arriving in the UK as the National Balancing Point (NBP) natural gas price was at the equivalent of $9.55 per million British thermal units. The Dutch Title Transfer (TTF)) price for Continental Europe was at the equivalent of $9.85 per MMBtu.

May 17 (LNGJ) - The LNG carrier “Vladimir Rusanov”, with 172,000 metres capacity, was berthing on May 17 with a cargo to discharge at the Isle of Grain LNG import terminal, operated by National Grid Plc on the Medway-Thames estuary 45 miles southeast of London. The shipment, lifted on May 10 from the Yamal plant in the Arctic region of northern Siberia, is arriving in the UK as the National Balancing Point (NBP) natural gas price rose on May 17 to a record 2021 level of $9.70 per million British thermal units.

April 7 (LNGJ) - The 172,000 cubic metres capacity carrier, “Nikolay Urvantsev”, was scheduled to discharge a liquefied natural gas cargo on April 7 at the UK Isle of Grain LNG import terminal on the Medway-Thames estuary, located southeast of London, according to Thamesport data. A second Russian shipment is also on the way from the Yamal export plant at Sabetta in northern Siberia. 

   The 172,600 cubic metres capacity vessel, “Christophe de Margerie”, is expected to deliver to the Isle of Grain on April 9 after the nine-day voyage from the Yamal facility, operated by Russian natural gas company Novatek. Other Yamal LNG shareholders include France’s Total and China National Petroleum Corp.

Europe’s largest LNG import terminal, the Isle of Grain facility located 45 miles southeast of London on the Medway-Thames estuary in Kent, has received 22 LNG shipments in 2020, including its 500th overall cargo, as the UK’s three terminals have unloaded around 60 shipments in two-and-a-half months.

US cargoes and others from Atlantic Basin exporters as well as Russia have been pointed at the UK as a key destination as prices have tumbled in Asia at just over $3.00 per million British thermal units for most of 2020 amid a global over-supply.

The UK National Balancing Point (NBP) price was last at the equivalent of $2.95 per MMTU, down from $3.70 per MMBtu in January, while the main Continental European price, the Dutch Title Transfer Facility (TTF), has tracked the UK benchmark, but was slightly higher at $3.00 per MMBtu.

“We’re delighted to confirm that we welcomed the 500th ship at our LNG import terminal on the Isle of Grain,” said Simon Culkin, Terminal Manager at National Grid's Grain LNG.

“The ‘LNG Merak’ berthed, delivering a cargo from Zeebrugge, and is the 22nd ship to arrive at Grain this year,” added Culkin.

The 174,000 cubic metres capacity “LNG Merak” is one of the newest vessels transporting cargoes from the Russian Yamal export plant in northern Siberia, as well as trans-shipments from ports such as Zeebrugge in Belgium.

“Since commissioning our terminal in 2005, we have taken delivery of LNG from 13 countries, further strengthening the diversity and security of UK gas supplies,” Culkin stated.

LNG carrier deliveries to Grain LNG have been more than matched by the two terminals at Milford Haven in Wales, South Hook LNG and Dragon LNG, which have welcomed a combined 35 cargoes.

The growing UK’s deliveries since January have come from nations such as the US, Qatar, Nigeria, Trinidad and Russia.

LNG shipments to Britain increased by around 64 percent in 2019 compared with the previous year and 2020 is expected to be  a record year as more US capacity has come on stream.

Natural gas currently makes up 40 percent of the UK’s total energy mix, up from 35 percent in 2015.

About 45 percent of UK natural gas comes from domestic resources in the North Sea and 55 percent is imported, with 15 percent coming from LNG and 40 percent from pipeline imports, mostly from Norway.

“LNG delivers much needed flexibility and energy reliability, enabling the integration of intermittent renewable energy and provides access to affordable energy,” explained National Grid’s Culkin.

“We’re very proud that LNG, supported by our extensive infrastructure at Grain,’ he added.

LNG imports have increased significantly over the past six months all over Europe, including to other large importers such as France and Spain.