Novatek signs Yamal LNG supply contract with Engie

OREANDA-NEWS. June 09, 2015. Russian independent gas producer Novatek has concluded a contract to supply French gas firm Engie — formally GDF Suez — with 1mn t/yr of LNG from the planned 16.5mn t/yr Yamal LNG facility in Russia.

Novatek will deliver cargoes from Yamal LNG to France's 7.25mn t/yr Montoir terminal on a fob basis under the 23-year contract. Cargoes will be transshipped at Montoir to Engie vessels for possible delivery to other terminals. Cargoes will be transferred from heavy icebreakers to conventional LNG tankers, saving fuel costs and freeing icebreakers to return to Yamal.

Belgian gas system operator Fluxys signed a 20-year contract with Yamal LNG in March to provide transshipment services for up to 8mn t/yr of LNG at an extension to the 7.2mn t/yr Zeebrugge terminal.

Yamal LNG plans to commission the first of its three 5.5mn t/yr trains in late 2017, with commercial deliveries starting in 2018. The second train will be commissioned in 2018 and the third in late 2019.

Yamal LNG is 60pc owned by Novatek, 20pc by Total and 20pc by Chinese state-owned CNPC.

Novatek said it is in talks with would-be buyers over taking a 9pc stake in the project.

Project partners plan to secure project financing for Yamal LNG by the middle of this year, Total said today. Signing this supply contract contributes to closing Yamal LNG's external financing, Novatek chairman Leonid Mikhelson said.

Novatek plans to reserve 4pc of the LNG produced at the facility for spot market sales.

Yamal LNG is the only Russian LNG project expected to start before 2020. Five planned Russian LNG projects — with a combined capacity of 40mn t/yr — have been delayed because sanctions on Russia have caused financing issues. The plants are now scheduled for commissioning by 2030, back from expected start dates in 2018-21 previously.