CNPC in talks to take part in Arctic LNG of Russia’s Novatek

BEIJING, Aug 4 (PRIME) -- China National Petroleum Corporation (CNPC) is considering participation in Arctic LNG, a liquefied natural gas (LNG) project of Russian independent gas producer Novatek, Li Yueqiang, head of the CNPC’s international department, told reporters on Thursday.

“We are participating in the first line of the project, Yamal LNG, and the second line will be established in the future (Arctic LNG). That is why we have already held preliminary negotiations on the second line,” he said, adding that implementation of the Arctic LNG project is at the initial stage.

Novatek is building an LNG plant on the Yamal Peninsula, and plans to build another one, Arctic LNG, on the Gydan Peninsula in the north of West Siberia.

The Yamal LNG project envisages construction of a 16.5-million-tonne plant on the basis of the Yuzhno-Tambeiskoye field. Novatek holds 50.1% in the project, CNPC owns 20% and China’s Silk Road Fund holds 9.9%. The plant is to be launched in 2017.

Novatek CEO Leonid Mikhelson said earlier that the Arctic LNG plant may be launched in 2023.

In July, Russian Foreign Minister Sergei Lavrov invited China to participate in projects in the Arctic, including the creation of LNG production capacities.

HIGHER DEMAND FOR GAS

China may raise gas imports to 190-270 billion cubic meters annually by 2030, and gas consumption is likely to rise too, Yueqiang also said. China’s gas consumption amounted to 200 billion cubic meters, and gas imports stood at 53 billion cubic meters in 2015.

CNPC and Russian gas giant Gazprom are still in talks on gas supplies via a so-called eastern route, Yueqiang said. The Chinese company wants vertical integration of upstream, midstream and downstream activities, but the companies have not agreed on the model, he said.

In May 2014, Gazprom and CNPC signed a contract to supply up to 38 billion cubic meters of gas per year via the Sila Sibiri (Power of Siberia) pipeline, or the eastern route. The pipeline will be around 4,000 kilometers long. Gazprom plans to launch gas delivery through the eastern route in 2019 at an initial amount of 5 billion cubic meters.

In May 2015, Gazprom and CNPC signed an agreement on main conditions of gas supplies via the western route, or the Sila Sibiri-2 pipeline. The capacity of the project’s first stage will stand at 30 billion cubic meters annually.

SHELF PROJECTS

CNPC is also holding negotiations to cooperate with Russian companies on the shelf, Yueqiang said.

“We are negotiating cooperation in shelf projects constantly, but we have not reached a breakthrough yet,” he said.

In late 2015, CNPC and Russian oil producer Gazprom Neft signed a memorandum of intent to cooperate in geological exploration and oil production in Russia, including its Arctic shelf, China and other countries, as well as in refining and selling oil.

In April, CNPC First Vice President Wang Zhongcai said that Russian state-run oil major Rosneft invited the Chinese company to take part in geological exploration on the Russian shelf.

Yueqiang said that CNPC and its Russian partners have not discussed cooperation outside Russia and China yet.

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