Opinions

2017 August 15

(Leonid Mikhelson, Chaiman of the Management Board, PAO Novatek - On implementation of Yamal LNG and Kola Yard projects )

- Yamal LNG is proceeding according to plan. More than 31,000 people work at the site today, start-up and adjustment works have been started and are in full swing. The first line is about to be put into operation. Estimations have already been made for the second and the third lines. It appears that the second line will become operational three months ahead of schedule with the third one scheduled for 2019 to be put into operation even six – nine months earlier, perhaps. 

We have signed a $19 billion loan limit with banks and this limit has been completely closed, but we are asking some financial institutions to reduce the limit, because there are others who want to enter the financing pool and in a month or two they will join in. A number of European banks, countries that are also participants in this project, will join the financing.

We have started implementation (pre-implementation) of the Arctic LNG-2 project and, according to the order signed in June 2015, we have completed the design of the first turn – a center for construction of large-scale offshore structures (legal entity named Kola Yard) – this moth we have embarked on the construction of this facility.

What is changed in the project? We have built Yamal LNG on the shore. We were building the surface facilities dealing with environmental issues etc. Now we have made the following decision: the design will be changed. LNG production lines will be placed on the gravity-based structures. These platforms, as well as the liquefaction trains, will be constructed in normal factory conditions. We plan to launch the first stage of the Kola Yard in 2019 and start the construction.

It is very important that new engineering center was established at NIPIGAS (one of our best institutions). Foreign ngineering partners account for 51%. Last month, we signed an agreement for the project stage. The project stage will be finished by the end of the next year.

At the earlier stages, we invite all Russian manufacturers and suppliers available. We have held a big seminar, over 50 representatives from plants and contractors attended the event.

Only our domestic manufacturers with their own materials, equipment and construction facilities can join our facility.

... Considering the new solutions, we expect a 30-pct reduction of costs. The contracts signed under Yamal LNG project worth about RUB 600 billion. This figure will be sharply increased.

We expect that the Kola Yard itself will generate 8,000 – 10,000 jobs, total number of jobs in Russia (suppliers and contractors) will make 50,000 – 60,000.

Transcript from the meeting with RF Prime Minister Dmitry Medvedev.