Novatek announces plans to build third massive LNG plant in northern Siberia

Novatek, the largest private natural gas supplier in Russia, has said it will have sufficient gas reserves to add a $10bn LNG plant to its processing complex in northwest Siberia, and that it plans to build a series of transshipment complexes.

The company began producing LNG at its Yamal plant on the Gydan peninsula in 2017 and plans to start a second, Arctic LNG 2, in 2023 at a cost of $10bn. Now Leonid Mikhelson, Novatek’s chief executive, has told reporters that the company has acquired sufficient gas licences to build another $10bn plant, although he did not say when work might begin.

Speaking at a press conference in Tokyo, Mikhelson said Novatek’s holdings on the Gydan gave it "the necessary resource base for another LNG project of the size of Arctic LNG 2", which has a production capacity of 20 million tonnes of LNG a year, Reuters reports.

Novatek last week concluded an agreement with a number of Japanese firms to develop a reloading complex for LNG in the Gydan. A press release from the company said a cooperation agreement had been reached with logistics company Mitsui OSK Lines and the Japan Bank for International Cooperation to build a number of LNG transshipment complexes in the territory of Kamchatka and Murmansk.

Mikhelson said in the release: "We have already started successful cooperation with Japanese companies in large LNG projects, including Yamal LNG and Arctic LNG 2, and, accordingly, we see great potential in expanding further this mutually beneficial cooperation.

"The construction of the Kamchatka and Murmansk transshipment complexes will help to optimise logistics and maximise the efficiency of LNG deliveries from Yamal and Gydan to LNG key markets of the Asia-Pacific region, including Japan, the largest global LNG consumer. We think we will reach final arrangements for these projects by year end".

The expansion in based on an expected surge in demand for LNG. The latest forecast from Shell says global demand will rise 27 million tonnes to 319 million tonnes in the course of this year.

The involvement of Japan in Novatek’s plans reflects the fact that Japan is the largest importer of LNG in the world, with an annual demand of 83 million tonnes in 2018. When built, Novatek’s three plants would be equal to about three quarters of this.

Image: Novatek’s Yamal plant can now produce 19 million tonnes of LNG a year (Novatek)

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