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Russia's Novatek brings forward start date for Arctic LNG 2's third train to 2025

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Russia's Novatek brings forward start date for Arctic LNG 2's third train to 2025

Highlights

Previous guidance was for third train to start up in 2026

First train at 19.8 million mt/year plant to start in 2023

Mikhelson sees 'year-round' NSR navigation in 2023/2024

Russia's Novatek plans to start up the third train at its 19.8 million mt/year Arctic LNG 2 project in 2025, CEO Leonid Mikhelson said May 17, earlier than previous guidance of 2026.

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Mikhelson told Russian President Vladimir Putin during a meeting at the Kremlin that the schedule for the project, which is currently under construction, had not been impacted by the coronavirus pandemic.

"Previously, we planned the third train in 2026, but now the trains will be launched in 2023, 2024, and 2025," Mikhelson said, according to a transcript of the meeting posted to the Kremlin website.

"Despite COVID-19, we did not deviate from the schedule of implementation of Arctic LNG 2," Mikhelson said.

Each of the three trains at Arctic LNG 2 will have a production capacity of 6.6 million mt/year, and in April, the partners in the project all concluded 20-year deals to take LNG from the plant.

Novatek has a 60% stake in Arctic LNG 2, with the remaining shareholders comprising France's Total (10%), China's CNPC (10%), China's CNOOC (10%) and a consortium of Japan's Mitsui and Jogmec -- called Japan Arctic LNG -- with the final 10% stake.

Arctic LNG 2 is Novatek's second major LNG export facility after the 16.5 million mt/year Yamal LNG plant, which started up in 2017.

Mikhelson said Yamal LNG was operating at 114% of its nameplate capacity.

Northern Sea Route

Mikhelson also said that he hoped the Northern Sea Route would be available "year-round" for LNG exports to Asia in 2023/24.

The NSR has historically been open from late June until around mid-November, but Novatek used the route early in 2020 in June, and also sent two LNG cargoes via the NSR in January this year.

"This is another step toward the year-round operation of the Northern Sea Route," he said, adding that year-round navigation could be possible from 2023/24.

Two cargoes of LNG loaded at Yamal LNG made the journey east in January via the NSR to Asia.

The Christophe de Margerie, an Arc7 ice-class Arctic LNG tanker chartered by the Yamal LNG project, completed an independent passage along the eastbound part of the NSR on Jan. 16, followed by the Nikolay Yevgenov.

Both LNG tankers delivered some 140,000 mt of LNG produced at Yamal LNG to destinations in the Asia-Pacific region.

The total delivery time for a cargo loaded onto a specialized Arc7 tanker from Yamal LNG via the NSR is some 40% shorter than the route through the Suez Canal to Asian markets.

Being able to send cargoes eastward to Asia through the year would likely mean significantly more Yamal LNG cargoes moving directly to Asian markets rather than being sent to or transshipped in Europe.

Transshipment points

Novatek is also developing two transshipment centers -- at Murmansk for westward shipping and at Kamchatka for east-bound exports -- to optimize shipping.

Novatek can use its chartered icebreaker fleet to export LNG to the transshipment centers from where it can load it onto conventional LNG tankers.

Each transshipment complex comprises a floating LNG storage unit with a capacity of 360,000 cubic meters with two ship-to-ship transshipment points.

"At the end of 2022, from 2023, the transshipment points will start operating in Kamchatka and Murmansk," Mikhelson said.

Each will have a 10 million mt/year capacity at launch, he said.

In late April, Novatek said it had signed a heads of agreement to sell to Total a 10% stake in Arctic Transshipment, a wholly-owned Novatek subsidiary that will operate the two LNG transshipment complexes.