France's Total signed definitive agreements with Novatek for a 10 percent acquisition of the Arctic LNG 2 project, a major liquefied natural gas development led by Novatek on the Gydan Peninsula in Russia, Total announced Tuesday.
The company said that taking into account Total’s 19.4 percent stake in Novatek, and Novatek’s intention to retain 60 percent of the project, Total's overall economic interest in this new LNG project will be approximately 21.6 percent.
"Should Novatek decide to reduce its participation below 60 percent, Total will have the possibility to increase its direct share up to 15 percent," Total explained.
The project’s final investment decision is expected in the second half of 2019, with plans to start up the first liquefaction train in 2023.
Novatek and Total also agreed that Total would be given the opportunity to acquire a 10 to 15 percent direct interest in all Novatek's future LNG projects located on the Yamal and Gydan peninsulas.
"We are delighted to have concluded the definitive agreements for our entry into this new world class LNG project based on the vast Russian gas resources alongside our partner Novatek. Arctic LNG 2 builds on the success of Yamal LNG and will introduce several innovative solutions to further increase competitiveness," commented Patrick Pouyanne, Total chairman and CEO.
"Arctic LNG 2 fits into our strategy of growing our LNG portfolio through competitive developments based on giant low-cost resources primarily destined for the fast growing Asian markets," he added.
With a production capacity of 19.8 million tonnes per year or 535,000 barrels of oil equivalent per day (boe/d), the Arctic LNG 2 project will develop over 7 billion boe of resources in the Utrenneye onshore gas and condensate field.
The project will involve installation of three gravity-based structures in the Gulf of Ob on which three liquefaction trains of 6.6 million tonnes per year each will be installed.
Arctic LNG 2 production will be delivered to international markets by a fleet of ice-class LNG carriers that will be able to use the Northern Sea Route and a transshipment terminal in Kamchatka for cargoes destined for Asia and one close to Murmansk for cargoes destined for Europe.
By Murat Temizer