UPDATE 2: Putin: Russia can become world’s top LNG producer

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ARKHANGELSK/SABETTA SETTLEMENT, Mar 30 (PRIME) – Russia can become the world’s top liquefied natural gas producer, Russian President Vladimir Putin said on Thursday after the Yamal LNG plant announced plans to sell first gas on the spot market this year.

“If we act in a similar manner and at a similar rate, which, honestly speaking, has surprised me, then there is no doubt that Russia can be and will be the biggest liquefied natural gas producer in the world,” the president said during a conference call referring to the speed of Yamal LNG construction. “We have all the reasons to think so, to believe in that and to strive for that.”

Leonid Mikhelson, CEO of Novatek, one of the owners of Yamal LNG, said that debut LNG batches will be sold on the spot market, while long-term contract deliveries will begin in 2018.

“We will start deliveries under long-term contracts next year, this year we plan to sell on the spot market. Participants of the project will enter the spot market with the first batches, where they will be sold best,” he said.

The Yamal LNG facility with a capacity of 16.5 million tonnes annually, owned by Novatek, Total, CNPC and the Silk Road Fund, is to launch operations on the basis of the Yuzhno-Tambeiskoye deposit.

Putin said he hopes the facility will be commissioned and will reach the projected capacity on time. He promised government support to the project in every possible way.

Total CEO Patrick Pouyanne said that the Yamal LNG facility is more commercially viable than many other LNG projects in the world.

“The project is really competitive. Much more competitive than many other projects around the globe,” he said, adding that Novatek should look for ways to reduce production costs.

Mikhelson said the company plans to start talks with potential partners in Arctic LNG 2 project in 12 to 18 months.

“We plan to start some preliminary negotiations with potential partners maybe sometime in a year, a year and a half,” Mikhelson said.

Novatek is informing potential partners about project plans but is not holding talks on their possible participation so far and will make an investment decision on Arctic LNG 2 independently, he added.

The capacity of the project will amount to no less than the capacity of Novatek’s first LNG plant Yamal LNG. Its launch is planned for 2022–2025. The plant will use resources from fields located on the Gydan Peninsula.

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