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Gazprom to market Yamal-sourced LNG to Europe and South America

Singapore — Russia's state-owned Gazprom is planning to sell most of its Yamal LNG volumes in the Atlantic basin, including customers in Europe and South America, a company official said Thursday.

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Gazprom signed a 20-year contract with Russian independent producer Novatek in late January to offtake 2.9 million mt/year of LNG from the Novatek-controlled Yamal LNG project in Russia's northern Yamal peninsula, which is due to start up in 2017.

Deliveries to Europe are expected to meet growing demand from the downstream transport and bunkering markets, said Alexander Medvedev, Deputy Chairman of Gazprom's Management Committee, in an interview with Platts.

"Europe will need more LNG to be used in transportation," Medvedev said. "There is already infrastructure prepared in Rotterdam for example. You could load trucks from the ship and deliver it to the location."

Some of the Yamal LNG volumes could also be delivered to customers in Asia, including India's state-owned buyer Gail, which has a 20-year supply contract with Gazprom starting from 2019. But the bulk of Yamal LNG volumes are likely to stay in the Atlantic, Medvedev said.

Gazprom's early plans to reload Yamal LNG from ice-class tankers to conventional vessels at Europe's reload facilities had been scrapped, Medvedev said, adding that the cargoes would be delivered to end-users in either the Atlantic or the Pacific basins aboard ice-class vessels.

"We do not plan to reload," Medvedev said. "This option was considered but it is more expensive."

The Yamal LNG project involves the construction of three LNG trains, with a capacity of 5.5 million mt/year each, and the development of hydrocarbon resources in the South-Tambeyskoye gas field.

The first train is scheduled for completion in 2017, with the second and third train planned for commissioning each subsequent year.

Novatek, Russia's second largest gas producer after Gazprom, owns 60% of the $27 billion Yamal LNG project, with France's Total and China's National Petroleum Corp each holding a 20% stake.

--Abache Abreu,
--Edited by Jonathan Loades-Carter,