Total SA acquired from PAO Novatek a direct 10% interest in the 19.8 million tonne/year Arctic LNG 2 project near Russia’s Gydan Peninsula. Arctic LNG 2 envisages building three 6.6 million-tpy LNG trains on gravity-based structure platforms in the Gulf of Ob.
Arctic LNG 2 production will be delivered to international markets by a fleet of ice-class LNG carriers that will be able to use the northern sea route, with a transshipment terminal in Kamchatka for cargoes destined for Asia and one close to Murmansk for cargoes destined for Europe.
The project is based on the hydrocarbon resources of Utrenneye field. As of yearend 2018, Utrenneye field’s 2P reserves under the Russian classification system totaled 1,978 billion cu m of natural gas and 105 million tons of liquids.
Front-end engineering and design work on Arctic LNG 2 ended in October 2018, confirming preliminary project-cost estimates of $20-21 billion. The 10% sale will close by the end of this year’s first quarter. The project’s final investment decision is expected to be taken in this year’s second half, with plans to start the first liquefaction train in 2023.
Considering Total’s 19.4% stake in Novatek and Novatek’s intention to retain 60% of the project, Total’s overall economic interest in Arctic LNG 2 will be roughly 21.6%. Should Novatek decide to reduce its participation below 60%, Total will have the possibility to increase its direct share to as much as 15%.
Novatek and Total also agreed that Total will have the opportunity to acquire a 10-15% direct interest in all Novatek’s future LNG projects on the Yamal and Gydan peninsulas.