LNG

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. 

Chinese shipyard Wison Offshore and Marine has completed four modules to make up the first liquefaction Train at the Arctic LNG II export plant being developed on the Gydan Peninsula in northern Siberia and the equipment was scheduled to be shipped during September.

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.

A Russian joint venture involving fleet owner Sovcomflot and natural gas company and LNG developer Novatek has signed contracts with a Russian bank and Zvezda Shipbuilding in the Far East to construct and lease 10 ice-breaking Arc-7 class LNG carriers.

The venture called Smart LNG has simultaneously signed long-term time-charter agreements for these 10 vessels with the Novatek-led Arctic LNG II project.

In total, contracts for 15 such vessels have now been signed, including shipbuilding, financing with Russian bank Veb.Rf Group, leases and time-charter contracts.

The Arctic LNG II project being developed with three gravity-based platforms and the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce 19.8 MTPA of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Novatek holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corporation (Jogmec).

The contracts for the lead ship in the series were signed by Socomflot in October 2019 and the contracts for another four sister ships were signed by Smart LNG in January 2020.

Sovcomflot, also known as SCF, continues to implement its strategy, with the goal of steadily growing the company’s value through expanding its portfolio of long-term industrial shipping contracts.

“The company point as a special focus on operations in challenging climatic and ice conditions,” said Sovcomflot.

“With 10 long-term time charters added to this portfolio, SCF $20 billion in contracted future earning and receivables,” stated the Russian shipping line.

The vessels will be operated under the Russian Federation flag and the Russian Maritime Register of Shipping (RS) will provide supervision during the construction of the vessel series.

The Zvezda complex is located at Bolshoi Kamen on the coast of the Sea of Japan and about 12 miles northeast of the city of Vladivostok.

The shipbuilder is owned by a consortium of Russian energy companies, including Rosneftegaz, Rosneft and the financial affiliate of Gazprom, Gazprombank.

“Shipbuilding and time charter contracts for 15 Arc7 LNG carriers, signed between 2019-2020, enable the Russian shipping community to play a role in transporting cargoes of strategic importance for the Russian economy, which are generated by large-scale energy projects in the Russian Arctic,” said Igor Tonkovidov, President and Chief Executive of Sovcomflot.

“These contracts will also help to further develop our national expertise in ice navigation and create over 850 new jobs for Russian seafarers, as all the 15 vessels will have Russian crews,” explained Tonkovidov.

“We are pleased to see that this new generation of Arctic LNG carriers, which will contribute significantly to growing the cargo traffic along the Northern Sea Route, was designed based on SCF’s long-standing experience of safely operating vessels in ice conditions,” stated the Sovcomflot CEO.

Sovcomflot bases its success in developing long-term partnerships with key customers, including Gazprom, Novatek, Lukoil, Royal Dutch Shell, French major Total, Exxon Neftegaz and Sakhalin Energy.

The Russian line’s fleet comprises 146 vessels with a total deadweight of 12.6 million tonnes, including ships owned through joint ventures. More than 80 vessels have an Ice classification.

Novatek, the Russian natural gas company and operator of the Yamal plant and leader of the Arctic LNG II project, said a supplementary Train will come on stream at Yamal before year-end as the second project continues to advance.

Novatek said in a presentation distributed to investors that the Yamal facility had sent out almost 440 cargoes amounting to 32 million tonnes through April 2020.

A total of 29 nations had received Yamal LNG since the plant came on stream at the end of 2017.

The small-scale fourth Train at Yamal will produce 900,000 tonnes of LNG compared with the three larger Trains, which each have capacity of 5.5 million tonnes per annum.

When the supplementary Trains starts up in several month overall output at Yamal will be 17.4 MTPA.

As regards the Arctic LNG II project being developed with three gravity-based platforms on the Gydan Peninsula, the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce 19.8 MTPA of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Latest 2P reserve estimates for Utrenneye gas give resources of 1,180 billion cubic metres and with 62 million tonnes of condensate.

“More than 5,000 people at currently working at the field,” said the company.

‘They have completed the backfilling of the Gas Treatments Unit-1 for the first dome and well pads 1, 2, and 3 for production drilling,” it added.

“Official permits have been received to proceed with completing Dry Dock No. 1 and there is continued rock blasting at Dry Dock No. 2,” stated Novatek.

The Russian company holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corporation (Jogmec).

Novatek also gave a brief overview of its third LNG facility, the small-scale Cryogas-Vysotsk plant on the Baltic Sea coast.

Novatek owns 51 percent of Cryogas-Vysotsk, which it acquired in 2017. The facility supplies mainly Russian customers, but also small-scale users in Scandinavian and northwest European markets.

The first quarter 2020 volumes sold by Cryogas-Vysotsk amounted to 112,000 tonnes of LNG, including 26 ship-loadings and 195 loadings by trucks .

The Cryogas-Vysotsk project capacity is 660,000 tonnes per annum of LNG.

Infrastructure includes a 42,000 cubic metres capacity storage tank and an offloading terminal designed to handle small-scale and medium-scale carriers with a capacity of up to 30,000 cubic metres.

Novatek, the Russian developer of the Arctic II LNG project on the Gydan Pensinsula, said it signed a deal with Franco-US energy contractor TechnipFMC for the engineering, procurement, construction and commissioning of the liquefaction plant to produce 19.8 million tonnes per annum.

Novatek, the Russian operator of the Yamal LNG plant in Siberia, said a subsidiary of the Yamal LNG stakeholder, China National Petroleum Corp., has decided to become a shareholder in Novatek’s second liquefaction joint venture, Arctic LNG II.

Sept 19 (LNGJ) - Russian natural gas and LNG producer Novatek has boosted the changes of its Arctic II LNG joint venture progressing by making two new discoveries in the Utrenneye field in the Gydan Peninsula in Siberia. The existing Yamal LNG plant operator said the discoveries are estimated at 405 billion cubic metres of natural gas and 40 million tons of gas condensate and would further underpin a new liquefaction and export plant in the region. The resources are within the Utrenneye licence area owned by the Arctic LNG II project. “The new deposits expand the reserve potential of the field and open additional opportunities for implementing the Arctic LNG II project,” said Novatek Chairman Leonid Mikhelson.