Thursday, March 3, 2011

Novatek expects to choose “more than one” international partner for its Yamal LNG project by the end of 2011; Total is the first to buy interest - Which supermajor will be the Next??



Novatek, which will hold 51 percent of the project, plans to select other participants “soon,” keeping Total as the main partner. Novatek plans to add more major partners are planned, who can help with bringing in finances to the project, and has expertize in marketing and building LNG facilities. Many international majors such as Shell, ConocoPhillips, ExxonMobil and Total, as well as investors from Asia, have expressed interest in the project.

Novatek, initially expected foreign partners for Yamal LNG to be chosen by the end of 2010 but in the middle of the last year Novatek suspended the talks until the government clarifies the tax regime for the gas-rich but remote Yamal Peninsula located in harsh climate conditions of the Arctic. The government has published its plan for the Yamal in late 2010 and is fully supportive for the project.

Yamal LNG plan
Novatek plans to build a 118.5 MMBOE/year LNG plant at Yamal. The governmental program for the project envisages the construction of the first train over the 2012-16 period. The project’s second and third stages are to be built starting 2013 and 2014 and ending in 2016 and 2018, respectively. Decision on if the project would see three trains with capacity of 39.5 MMBOE/year each or two trains with capacity of around 59.25 MMBOE/year is yet to be taken. The company has just completed pre-FEED study on the project and is studying now its results to launch the final FEED likely to be completed in late 2012 or early 2013.

Potential Market
On potential markets for future LNG supplies, company’s chief financial officer Mark Gyetvay said said: “We are looking at all the three markets. We look to the US to a less degree, possibly in the long-term, in the near future we believe the Asian-Pacific market is very attractive, we look at Europe as we think we can be competitive on the European market.”

Novatek expects to send at least one tanker with condensate to Asian markets via a so-called North Sea Route in 2011 to test once again the route, which the company plans to use for supplies of LNG cargoes from Yamal. Last year, Novatek and Russia’s biggest shipper Sovcomflot “successfully” tested the route. The route significantly reduces shipping time in comparison with the Suez Canal, but requires major ice-breakers to take tankers.

For more on Novatek http://docsearch.derrickpetroleum.com/research/q/Novatek.html

For more on Total Novatek deal: http://mergersandacquisitionreviewcom.blogspot.com/2011/03/total-spends-4-billion-for-stake-in.html

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