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May 3, 2021
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Under the cries of “clean” energy, we bought our gas for 20 years ahead

By the way, not only ours. Despite the worldwide schizophrenia of the fight against the climate and cries of abandoning oil, gas, nuclear energy, coal, etc. in favor of “clean” energy, already at the construction stage of Arctic LNG 2 (a joint venture between Novatek and foreign partners), 20-year sales and purchase agreements were concluded for the entire volume of liquefied gas to be produced.

The signed contracts provide for the supply of liquefied natural gas from Arctic LNG 2 on FOB (Free On Board) Murmansk and FOB Kamchatka terms according to price formulas linked to international oil and gas indices. Supply volumes are determined in proportion to the participants’ ownership shares in the project.

The start of LNG sales from the first technological line of the project is scheduled for 2023. The plant will start operating at full capacity in 2026. The agreement ends in 2042.

The direct buyers of LNG are Novatek Gas & Power Asia Pte. Ltd., Total Gas & Power Asia Private Limited, Japan Arctic LNG BV, CNPCI (Ghadames) Ltd., CEPR Limited.

On June 28, 2019, President Putin and Japanese Prime Minister Shinzo Abe signed an agreement under which Japan will invest $ 3 billion in the development of the Arctic LNG-2 project. At the end of 2020, the readiness of the project was estimated at 32%, the readiness of the first line – at 46%.

In April, Arctic LNG-2 signed a loan agreement with a syndicate of Russian banks to provide a credit line in the amount of EUR 3.11 billion. It is planned that after 3.11 billion euros from Russian banks, 1/3 of external financing will be provided by Chinese banks, and another 1/3 – by banks in Europe and Japan. External financing of the project will be completed this year and no one is going to introduce any sanctions precisely because gas is needed and will be needed by both Japan and the EU.

And given their climacteric schizophrenia, it is doubly needed.

NEW HORIZONS

Gas supply contracts over the next 20 years and external investment in Novatek projects provide the green light for new large-scale projects. which are already at the start.

For example, Novatek plans to set up a permanent offshore LNG transshipment complex from its Arctic projects in the Murmansk region. This will reduce the cost of LNG transportation and increase the turnover of high ice-class tankers.

The complex will consist of two floating gas storage facilities with a volume of 360 thousand cubic meters with two points of side-to-side transshipment. Its capacity will be 20 million tons per year. The launch of the transshipment terminal is scheduled for 2022, investments in the project are 70 billion rubles, 99% of which are private.

The implementation of the second LNG transshipment complex in Kamchatka is also planned. Its construction will require 108 billion rubles – floating storage facilities and onshore infrastructure will be built by Novatek at its own expense, and the state will provide money for dredging and an approach channel.

And these are not all of Novatek’s plans. In March, the company asked the government to give the opportunity to set in foreign currency tariffs for transshipment of LNG at terminals in the Kamchatka Territory and Murmansk. “This will give an opportunity to show financing banks the stability of this project, the possibility of its risk-free implementation,” Mikhelson said.

GAS IS NEEDED AS WATER

The demand for Russian LNG is growing in parallel with the global demand for LNG. In the next 10-20 years, the market may double, or even grow even more, just against the background of the fight against the climate.

After all, they imply a significant reduction in greenhouse gas emissions, which means the abandonment of coal energy, which in many countries takes up a significant share of generation.

For example, in Germany, coal accounts for almost a third of the generation. Over the next 12-15 years, Germany plans to completely abandon the use of coal and even close the nuclear power plant. It will not be possible to cover all your energy needs with wind and the sun, so there is no alternative to gas – hydrogen is also extracted from it.

Similar processes are unfolding in China, where the problem of air pollution is even more acute than climate change. At the end of 2020, the share of coal-fired power plants in the country was almost 57.5%.

At the end of March, the Russian Cabinet of Ministers approved a program for the development of LNG production until 2035. During this time, the capacity for the production of LNG in Russia will triple, up to 140 million tons per year and will occupy 20% of the world market.

To do this, Russia will need to implement projects for which no investment decision has yet been made, for example, Novatek’s Obskiy LNG or Rosneft’s Far Eastern LNG. An increase in LNG production capacity could attract investments in the Russian economy in the amount of at least $ 150 billion. …

As you can see from the example, “Arctic LNG 2” is a reality.

SHEEP HANDLING IS WORTH

The resource base allows Russian companies to successfully compete with foreign LNG producers in the world market. The Cabinet of Ministers estimates the cost of Russian LNG, taking into account the cost of transportation to sales markets, in the range of $ 3.7-7 / million BTU.

And natural gas prices in Europe (TTF) in Q1 2021 increased by 110% year-on-year to $ 6.5 / million BTU. At the same time, yen here are not the highest – in Asia they are traditionally higher and will grow for objective reasons – there is a chronic shortage of gas.

Another thing is that the fight for the markets will never end. But even here, as 2020 has shown, Russia knows how to fight.

Well, believers can continue to pray for renewable energy sources and Greta Thunberg.



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