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Novatek inks Petronet LNG pact

Russian gas giant eyes supply deals with India and inward investments in LNG projects under memorandum between companies

Russia’s largest independent gas producer Novatek has signed a memorandum of co-operation with India’s Petronet LNG to provide a framework both for future supply deals and investments by the latter in Russian projects.

The document, signed on the sidelines of an economic forum in the country’s far eastern city of Vladivostok on Wednesday, calls for both sides to agree terms of potential future liquefied natural gas supplies from Novatek-operated projects in Russia to India, as well as possible equity participation by Petronet in Novatek’s planned LNG projects in Russia.

The companies may also join forces in marketing LNG as preferred fuel for motor vehicles in India, Novatek said in a statement.

The Russian company said expected low development and production costs at its LNG projects in the Arctic region underpin its plans for competitive gas deliveries to major global energy consumption centres.

Novatek also said it had signed another memorandum with Indian trader H-Energy Global whereby the two companies would jointly invest in future regasification terminals in India and also create a trading joint venture to sell gas to customers in India, Bangladesh and other neighbouring countries.

Novatek already operates Russia’s largest LNG facility on the Yamal Peninsula, Yamal LNG in West Siberia. It is also working to bring online another major LNG project, Arctic LNG 2, on the neighbouring Gydan peninsula before the end of 2023.

Novatek executive board chairman Leonid Mikhelson said earlier this week the gas producer together with its foreign partners in Arctic LNG 2, expect to approve the final investment decision to go ahead with the development before the end of September.

France’s Total, China National Petroleum Corporation subsidiary CNODC, China National Offshore Oil Corporation and Japan Oil, Gas and Metals National Corporation hold a combined stake of 40% in Arctic LNG 2, which is expected to produce close to 20 million tonnes per annum of LNG.

Novatek still owns 100% stakes in two other previously announced LNG projects in West Siberia, Obsky LNG on the Yamal peninsula and Arctic LNG 1 on the Gydan peninsula.

The company may also consider reducing its current 60% shareholding in Arctic LNG 2 to 50% by offering the equity to a new partner, Mikhelson said earlier.

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