Novatek Moves Closer Toward FID on Arctic LNG 2


Novatek, Russia’s largest independent gas producer, has made significant strides toward a final investment decision (FID) on its second major LNG project in the Arctic.

Reuters quoted Novatek CFO Mark Gyetvay as saying that, while it does not have a specific date set for FID, the company aims to make the decision in the third quarter of this year, and that it has contracted 75% of the construction and materials for the project already. Novatek is close to finalizing the ownership structure for the project, having sold 10% to Total in February and additional 10% stakes to CNPC and CNOOC last month.

The company will likely sell another 10% to a third partner before FID, allowing it to maintain a 60% stake in the project. Several media outlets have speculated Saudi Aramco’s interest in investing. The two companies previously signed a cooperation agreement last year to collaborate on natural gas projects, including LNG.

The Arctic LNG 2 project follows Yamal LNG as Novatek’s second foray into the Arctic. Unlike Yamal, which was constructed onshore, Arctic LNG 2 will employ gravity-based structure platforms, engineered offshore platforms that will be towed into place and intentionally sunk in shallow waters. Novatek awarded engineering and construction contracts for the platforms in December to a joint venture between Saipem and Renaissance.

Construction on Arctic LNG 2 is scheduled to begin this summer, and the first train is expected to come online by 2023, though that is subject to change: The Financial Times previously reported that Novatek may push to launch the project earlier in anticipation of potential supply shortages in the 2020s.

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