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Novatek eyes Qatar LNG partnership deal

MOSCOW, June 4, 2016

Russia's No.2 gas producer Novatek would be interested in a tie-up with Qatargas, the world's biggest LNG exporter, as it seeks to expand its gas trading business, said Russian Energy Minister Alexander Novak.

Novatek plans to start its own liquefied natural gas production next year at its plant in Russia's Yamal peninsula, which it is building with France Total and China's CNPC and Silk Road Fund.

"Our company Novatek is interested in ... marketing of this type of fuel (LNG) jointly with a Qatari company," Novak told reporters at a joint briefing with Qatari Energy Minister Mohammed Al-Sada.

Novatek, whose $27 billion LNG plant will be the second in Russia after the Gazprom-controlled Sakhalin-2 LNG project on the Russian Pacific Ocean coast, declined to comment.

The largest non-state gas producer in Russia, it is barred from exporting natural gas to Europe by pipelines as state-owned Gazprom has the exclusive rights to ship gas abroad - legislation Novatek is now challenging.

Novatek has long been seeking ways to export Russian gas.

In 2012 its Switzerland-based trading arm Novatek Gas&Power signed a 10-year deal to supply German utility EnBW with gas, in a move to allow the Russian company to form a customer base in the lucrative European market.

Novatek's Yamal LNG project will have a total capacity of 16.5 million tonnes of LNG per year, split over three production lines of 5.5 million tonnes capacity each.

About 95 percent of Yamal's future production has been already pre-sold, but industry sources and analysts have said the plant will be able to produce additional cargos to sell on the spot market.

Despite Western sanctions imposed on Novatek and its major shareholder Gennady Timchenko, a close ally of Russian President Vladimir Putin, over Moscow's role in the Ukraine crisis, the company secured $12 billion in loans for Yamal LNG in April.

Alexander Kornilov, a senior oil and gas analyst at Aton brokerage in Moscow, said Novatek is likely to be interested in expand its own trading operations.

"It will be transforming into a large LNG player in the next couple of years, so the question of marketing will be a burning issue for the company," he said.-Reuters




Tags: Russia | partnership | Qatar LNG | Novatek |

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