Shenergy Group and Novatek sign Arctic LNG supply deal
Agreement stipulates delivery of over 3 million tonnes to China over 15 years
3 Mar 2021 | Michael Marray

Shanghai government-owned Shenergy Group and Novatek Gas & Power Asia have signed a long-term LNG sales and purchase agreement (SPA) for the LNG produced from Russia's Arctic LNG 2 project. Signed on February 25, the SPA stipulates the cumulative supply of more than 3 million tonnes of LNG for a term of 15 years, and will be delivered to LNG terminals in China on delivered ex-ship (DES) basis.

“Our LNG commercial strategy is to diversify our client base and target end consumers in the fast-growing Asia-Pacific region, and the LNG volumes produced from our Arctic LNG 2 project is core to our long-term objective of delivering affordable, secure and sustainable natural gas for many decades,” says Novatek chairman Leonid Mikhelson. “The Chinese market is one of the key regions in our LNG marketing strategy, and we plan to further increase our supplies of liquefied natural gas to this country.”

The project will involve the construction of three LNG liquefaction trains with a production capacity of  6.6 million tonnes per annum each, and cumulative gas condensate production capacity of 1.6 million tonnes per annum.

Arctic LNG 2 utilizes an innovative construction concept using gravity-based structure platforms to reduce overall capital cost and minimize the project’s environmental footprint in the Arctic zone of Russia. As of December 31 2020, the Utrenneye field’s 2P reserves under the Petroleum Resources Management System totalled 1,434 billion cubic metres of natural gas and 90 million tonnes of liquids.

The project’s participants include: Novatek (60%), Total (10%), China National Petroleum Corporation (10%), China National Offshore Oil Corporation (10%) and the Japan Arctic LNG consortium comprising Mitsui & Co and JOGMEC (10%).