Mitsui, JOGMEC may get more Japanese partners for Arctic LNG-2

BELOKAMENKA VILLAGE, Murmansk Region, Jul 2 (PRIME) -- A consortium of Japanese companies Mitsui and Japan Oil, Gas and Metals National Corporation (JOGMEC) can attract more Japanese companies to a U.S. $27 billion Arctic LNG-2 liquefied natural gas project of Russia’s Novatek, Novatek CEO Leonid Mikhelson told reporters on Tuesday.

On June 29, Novatek signed a deal to sell 10% in Arctic LNG-2 to the consortium of Mitsui and JOGMEC. On Monday, Reuters reported that the consortium was talking with Mitsubishi Corp about joining the consortium.

“In the next nine months. They (Mitsui and JOGMEC) can attract several companies from the top of Japanese businesses as of today. I mean several companies, not just Mitsubishi. We’ve agreed that we’ll approve any company, while they do the talking…We are not directly looking into offers from the other companies, we re-send them to Mitsui. They are to make a decision on a coordinated list of companies on their own,” Mikhelson said.

When asked whether Novatek was ready to negotiate participation of any Japanese company in the project outside the consortium of Mitsui and JOGMEC, he said, “No…Absolutely not.”

Novatek plans to discuss financing of Arctic LNG-2 and the Kamchatka LNG terminal with JBIC and other Japanese banks.

“Yes, we’ve met with JBIC…We will discuss participation in Arctic LNG-2 and in the transshipment facility as well with them in the first place. But we will also talk to other Japanese banks about participation in the financing,” he said.

Before making a final investment decision on the Arctic LNG-2 project, Novatek has to agree with partners on that and to pass corporate approval procedures, which means that a decision is most likely in September, he said.

The Arctic LNG-2 plant will be launched in 2022–2025 and fields of the Gydan Peninsula in the north of West Siberia will become its resource base. The facility is to produce 19.8 million tonnes of LNG per year.

YAMAL LNG

Another LNG plant of Novatek, Yamal LNG, will start paying dividends to the shareholders even before it redeems all external loans.

“Obviously, it will do that,” Mikhelson said. “They (the loan agreements) were signed for 15 years. We will start paying dividends before that…We can redeem loans and we can pay dividends, we are now making joint decisions on what we think is right and profitable for us.”

Yamal LNG will continue to redeem the loans of shareholders later this year after distributing the first money among its shareholders in late June. “This is not a final tranche this year. We will make more payments to the shareholders this year,” he said.

The Yamal LNG facility with a capacity of 17 million tonnes of LNG and over 2 million tonnes of gas condensate annually is based on the Yuzhno-Tambeiskoye field on the northern Yamal Peninsula. Novatek holds 50.1% in the project, France’s Total has 20%, China’s CNPC owns 20% and China’s Silk Road Fund holds 9.9%.

OTHER PROJECTS

Novatek is also studying participation of Japanese–Chinese consortium Mitsui O.S.K. Lines (MOL) in construction of LNG transshipment terminals in the Kamchatka Peninsula and in Murmansk.

“Regarding MOL, we like that partnership. The inclusion of Mitsui raises their chances for partnership. We are considering their participation in transshipment this or that way, we are discussing it. It covers both Kamchatka and Murmansk,” Mikhelson said.

He also said that Novatek is ready to consider supplies of LNG to the E.U. to backup gas giant Gazprom in case transit through Ukraine stops at the beginning of 2020 and the company is unable to fulfill the obligations to its customers, he added.

Novatek is building a storage and transshipment facility with a capacity of 20 million tonnes of LNG in the Ura Bay of the Murmansk Region, and plans to construct an LNG terminal in Kamchatka with the same capacity and a possibility of raising it to 40 million tonnes.

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