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Russia to offer Gydan Peninsula licence

Price tag for Soletsko-Khanaveyskoye gas field licence starts at $38 million

Russian Prime Minister Dmitry Medvedev has ordered the country’s natural resources and environmental ministry to auction an exploration and development licence for the Soletsko-Khanaveyskoye gas field on the Gydan Peninsula in West Siberia.

According to a copy of the Medvedev’s resolution, quoted by Moscow business daily RBK, the ministry has to arrange the auction before the end of this year, with the initial price tag of the licence at 2.4 billion rubles ($38 million).

The resolution also says that all gas from the field has to be liquefied at a local plant and exported.

This key term effectively limits participants to the country’s largest independent gas producer Novatek and its subsidiaries.

Novatek already operates an LNG plant near the port of Sabetta on the neighbouring Yamal Peninsula, and is planning to start operations at another LNG facility on the Gydan Peninsula in 2023.

The Soletsko-Khanaveyskoye gas field lies in the northern part of the Gydan Peninsula, close to the Geofizichesky block, the licence for which is in hands of a Novatek’s wholly owned subsidiary, Arctic LNG 1.

Based on an earlier Soviet-era exploration well, confirmed reserves of the asset are assessed at about 155 billion cubic metres, however there are expectations in-place resources of the field may be as high as 1.8 trillion cubic metres.

In April, Novatek executive board chairman Leonid Mikhelson suggested to Russian governmental officials to support a long-term plan to build several LNG plants on the Yamal and Gydan Penisulas with the total annual production capacity of 140 million tonnes of LNG.

However, state-controlled gas monopoly Gazprom is understood to have met the proposal with a cold shower. Several executives have suggested that since start-up in 2017, Yamal LNG has been delivering cargoes mostly to the European market, thus competing with Russian gas pipeline sales, managed by Gazprom.

According to Novatek, Yamal LNG produced 9 million tonnes of LNG between January and June this year, with over 90% of that volume transshipped from Arctic-class specialised carriers to traditional LNG transportation vessels at an offshore terminal near the shore of Norway.

Speaking earlier today near the Russian port of Murmansk, Mikhelson said that Yamal LNG may be prepared to deliver additional LNG cargoes to the European market this upcoming winter in case of potential Russian gas pipeline supply disruptions.

At the end of June, Gazprom executive board chairman Alexei Miller reiterated that the gas giant is unwilling to continue its gas transit shipments to Europe across Ukraine after the expiry of the current transportation agreement in the beginning of January 2020, unless Ukraine’s gas importer and distributor Naftohaz Ukrainy makes major concessions to the Russian monopoly.

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