NOVATEK to invest RUB 120 billion in production of LNG facilities in Murmansk

NOVATEK has commenced construction of gravity-based LNG lines at its shipyard in Murmansk. This facility will be built by NOATEK without involvement of the company’s partners with investments estimated at RUB 120 billion, NOVATEK CEO Leonid Mikhelson said at RF Government meeting on 25 October 2018 (the meeting transcript is available at the official website of the Government).

“Gravity-based LNG lines will be built at Murmansk shipyard. We have already started the construction of this facility. Investments in this facility (we call it a “plant-building plant”) is estimated at RUB 120 billion. It will built by NOVATEK alone, without partners”, said Leonid Mikhelson.

According to NOVATEK, the project implementation will attract up to 800 Russian companies with the “Murmansk center to integrate all this equipment”. About 15,000 jobs are to be generated in Murmansk with the number of new jobs to be created across Russia to total 80,000.

Leonid Mikhelson says that the target of 57 million tonnes by 2030 foreseen by NOVATEK strategy can be raised in the future. “Over the coming 10 years it will bring additional 1.5-pct growth of GDP and 30 billion dollars of additional export revenues”, he emphasized.

In compliance with RF Government Decree of 2010, NOVATEK is implementing two ambitious projects – Yamal LNG and Arctic LNG 2. The first turn was put in operation in 2017, the second – in August 2018 with the third one to become operational from December 2018, almost a year ahead of schedule, said Leonid Mikhelson.

Taking into consideration early launching of the project, gas carriers will be required for LNG shipment, he said. “In this context we ask for amendments to be introduced in the Merchant Shipping Code to allow that”, said Chairman of NOVATEK Management Board.

“It is also very important that we have made a decision to build the fourth line within the Yamal LNG project. This pilot-production line of up to 1 million tonnes will be assembled of 100% Russian equipment and operate under NOVATEK license”, he emphasized.

NOVATEK has commenced the Arctic LNG 2 project. New gravity-based technology lines will be assembled in Murmansk and transported to the Urenneye field on the Gydan peninsula. “We are going to keep 60% of the project. A contract has already been signed with Total to enter the project with 10%. We are in negotiations with a number of other potential partners under this project”, said Leonid Mikhelson.

According to him, the key competitive advantage is the low cost of gas production. As of today, it is 2.5 times less as compared with Henry Hub natural gas futures quotes. With a unique concept of new LNG lines and local content of production facilities it is possible to achieve a considerable competitiveness of liquefaction, believes Leonid Mikhelson.