Russia’s Novatek inks preliminary deal to market LNG, gas in China
Russia’s Novatek has signed a preliminary deal to create a joint venture with China’s Sinopec and Gazprombank to market LNG and gas to end users in China, Novatek said Wednesday.
Novatek operates the 16.5 million mt/year Yamal LNG plant in northern Russia, which has China’s CNPC (20%) and Silk Road Fund (9.9%) as shareholders.
It is also partnering with CNPC and China’s CNOOC in developing the larger 19.8 million mt/year Arctic LNG 2 facility, with both Chinese companies holding 10% stakes in the project.
“Chinese companies are investing in the development of Novatek’s LNG projects in the Arctic region of Russia,” CEO Leonid Mikhelson said.
“Creating a joint venture to trade LNG and gas in the domestic market of China not only facilitates sales of LNG produced, but also opens up opportunities for investments in the development of the end-customer segment in one of the largest and the fastest-growing gas and LNG markets in the world,” Mikhelson said.
The heads of agreement was signed during Chinese President Xi Jinping’s official visit to Russia.
Mikhelson said the deal represented “another step in implementing our long-term strategy across the entire value chain from the extraction and liquefaction of gas to the sale of LNG to the customers.”
Novatek expects to increase its LNG production capacity target to 70 million mt/year by 2030, up from a previous target of 57 million mt/year.