OREANDA-NEWS.   Heads of Agreement to supply up to 3 million tons of liquefied natural gas (LNG) per year by Yamal Trade to Gazprom Marketing & Trading Singapore (GM&TS) from the Yamal LNG project was signed today by Alexey Miller, Chairman of the Gazprom Management Committee and Leonid Mikhelson, Chairman of the NOVATEK Management Committee within the St. Petersburg International Economic Forum 2014.

The document will be effective for a period of over 20 years. LNG will be supplied under FOB (free on board) terms in a transfer point of Western Europe to be further delivered to Asia-Pacific markets, primarily to India. The price will be determined using the formula with oil indexation.

 “This Heads of Agreement will significantly reinforce the long-term LNG portfolio of Gazprom. It is an additional way to expand the global trade and use our own fleet of LNG carriers,” said Alexey Miller.

“It is another crucial step in implementing the Yamal LNG project. As regards LNG contracting, all the necessary conditions are provided for the successful launch of project financing,” said Leonid Mikhelson.

Background

The Yamal LNG project envisages the construction of an LNG plant with an annual capacity of 16.5 million tons, with natural gas to be delivered from the Yuzhno-Tambeyskoye field. The field's proven and probable gas reserves amount to 927 billion cubic meters. LNG production will start in the end of 2017. The project operator is Yamal LNG, with NOVATEK holding 60 per cent, Total – 20 per cent, and CNPC – 20 per cent in the company. Yamal Trade is a 100 per cent subsidiary of Yamal LNG.
Being a part of Gazprom Group, Gazprom Marketing & Trading Singapore is engaged in LNG trade, marine transportation and marketing in the Asia-Pacific region.
Free on board is one of trading terms stipulating that the seller is responsible for getting goods onto a ship and pays export duties. The buyer pays the cost of marine freight transport, cost of goods and arranges their transportation after arrival.