Novatek shareholders approve $ 11 billion in external financing for Arctic LNG 2

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Shareholders of Russia’s second-largest gas producer, Novatek, have approved $ 11 billion in external financing for the Arctic LNG 2 project on which Novatek has pledged its 60% stake in the project as collateral.

The approval came on April 23 at the company’s annual general meeting of shareholders. Making the announcement, Novatek CEO Leonid Mikhelson said the responsibility for fundraising would be divided in three ways between Russia, China and the tandem of Japan and Europe acting together.

The $ 21 billion project, which received final investment approval in 2019, is expected to start production in 2023 as Novatek expands its LNG exports east and west along the coast now navigable arctic of Russia.

Arctic LNG 2 will reach full capacity of nearly 20 mtpa in 2026, according to the company.

Novatek has a 60% stake in the project, with the remaining 40% being split equally between France’s Total, China National Petroleum Corporation, China’s CNOOC and the Japan Arctic LNG consortium, made up of Mitsui & Co. and the state-owned JOGMEC, officially known as Japan Oil, Gas, and Metals National Corp.

In April, Novatek said it would pledge the 60% stake as collateral for long-term funding, according to Reuters.

Financial media reports conducted by Reuters said in September that the project had already attracted enough international capital to cover almost all of the $ 11 billion sought. Quoting a document first cited by Reuters, S&P Global reported that “the national investment bank and credit agency Bpifrance SA has offered $ 700 million in credit financing; China Development Bank and German bank Euler Hermes would offer a $ 5 billion facility and a $ 300 million covered facility, respectively.

“Other state-backed institutions would have included the Japanese Bank for International Cooperation with a $ 2.5 billion facility, Italian SACE with a $ 1 billion covered facility, and an anonymous Russian bank with $ 1 billion, $ 5 billion, ”S&P Global reported, citing Reuters figures.

Russian state bank Sberbank approved funding of up to 3 billion euros ($ 3.5 billion) in January, Reuters wrote.

At the end of February, Novatek signed an agreement with Chinese group Shenergy to deliver more than 3 million tonnes of LNG to terminals in China over 15 years, as the Russian gas producer continued to align buyers with the intention of expand its presence in the Asia-Pacific region. Region.

“Our LNG business strategy is to diversify our customer base and target end consumers in the rapidly growing Asia-Pacific region,” Mikhelson said in a statement released at the time. “The Chinese market is one of the key regions of our LNG marketing strategy, and we plan to further increase our supplies of liquefied natural gas there.”

In January, the Russian Arctic-class LNG carrier Christophe de Margerie made the very first round trip along the Northern Kara Sea Sea Route to China, proving that navigation is possible all year round and giving Russia the opportunity to set attractive prices for its LNG exports.

Russia’s largest independent gas producer, Novatek entered the global LNG market by launching the Yamal LNG project in 2017. The upstream activities of the company are concentrated mainly in the Yamal-Nenets Autonomous Region, which is the largest natural gas production area in the world, accounting for about 80% of Russia’s natural gas production and about 15% of global gas production.

In the first quarter of 2021, Novatek produced 158.1 million BOE, including 20.15 Gcm of natural gas and 3,129 thousand tonnes of liquids (gas condensate and crude oil). This represents a 5.3% increase in total hydrocarbons produced (BOE) in the first quarter of 2021 compared to the first quarter of 2020, according to a press release from the company.

Novatek said capital spending on the 19.8 mtpa LNG project will reach $ 21.3 billion. Arctic LNG 2 is expected to start its first train in 2023; the second and third trains will launch in 2024 and 2026 respectively, according to the company’s website.



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