OAO Novatek signs 15-year LNG supply agreement with CNPC from Yamal
23 October 2013
OAO Novatek, Russia’s largest independent natural gas producer and its second-largest gas producer, concluded a Heads of Agreement for the supply of liquefied natural gas (LNG) between Yamal LNG and China National Petroleum Corporation (CNPC). The document provides for the supply of no less than three (3) million tons of LNG per year at delivered ex-ship (DES) terms for a period of 15 years with possible supply extension, with the LNG price is indexed to the Japanese Crude Cocktail.
Yamal LNG project envisages the construction of an LNG plant with annual capacity of 16.5 million tons per year based on the feedstock resources of the South-Tambeyskoye field. According to the PRMS reserve standards, the proven and probable reserves of the South-Tambeyskoye field as of 31 December 2012 were appraised at 907 billion cubic meters of natural gas.
Yamal also requires the construction of transport infrastructure including a sea-port and an airport located at Sabetta (north-east of the Yamal Peninsula).
Yamal LNG is a joint venture currently owned by OAO Novatek (80%) and Total S.A. (20%). On 5 September 2013, Novatek and CNPC concluded an agreement on purchase of a 20% equity share in Yamal LNG by CNPC. The transfer of title to the equity share is subject to receipt of necessary regulatory approvals and expected to be completed by 01 December 2013. Following completion of the deal, the shareholder structure of Yamal LNG will be as follows: OAO Novatek (60%), Total S.A. (20%) and CNPC (20%).
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