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Japan's Mitsui, JOGMEC agree to take 10% stake in Arctic LNG 2

Japan's Mitsui and Japan Oil, Gas and Metals National Corporation (JOGMEC) agreed to take a 10% stake in Novatek's Arctic LNG 2 project, Novatek said Saturday.

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"The participation in the project also provides for the long-term LNG offtake of approximately 2 million mt/year by the Japanese partners," Novatek said. The company did not disclose other terms including final price, but Russian president Vladimir Putin said that the investment would be around $3 billion. He was speaking during a press conference televised on the state-owned Russia 24 channel.

The companies plan to close the agreement "in the nearest future," subject to regulatory approvals, Novatek said.

"Japan has 50 years of experience with importing LNG and is one of the largest LNG consuming countries. Moreover, Japanese companies have extensive experience in implementing LNG projects as well as marketing LNG around the world. The entry of Japanese partners into Arctic LNG 2 will contribute to its successful implementation," Novatek CEO Leonid Mikhelson said.

Novatek has already reached binding agreements with two Chinese companies -- CNPC subsidiary China National Oil and Gas Exploration and Development Co., and CNOOC -- for each to buy a 10% stake in the project. France's Total also bought a 10% stake in the project earlier this year.

Novatek said previously it planned to retain a 60% stake in the project, while selling the remaining interest to foreign partners to share financial risks and secure markets for its future LNG. It is planning to make a final investment decision on the project in the third quarter.

Plans for Arctic LNG 2 include 3 trains with capacity of 6.6 million mt each, or a total of 19.8 million mt. Novatek plans to commission the first train in 2023, the second train in 2024, and the third train in 2025, before reaching full capacity in 2026.

--Rosemary Griffin,

--Edited by Claudia Carpenter,