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Novatek tenders for Obsky LNG road links

Russian independent tenders plans temporary routes to drill sites on the Yamal Peninsula in West Siberia

Russian independent Novatek has started preparations for drilling and construction activities linked to its proposed Obsky liquefied natural gas project on the Yamal Peninsula in West Siberia.

Novatek, through its subsidiary Obsky LNG, is looking for contractors to build and maintain temporary winter roads to the Upper Tiuteyskoye and West Seyakhinskoye gas and condensate fields that are intended to provide feedstock for the scheme.

These roads will open for a five-month time frame this coming winter and will enable the operator and local contractor Novourengoyskaya Drilling to mobilise equipment and supplies to the two fields, according to tender disclosure notices from Obsky LNG.

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The operator said it expects to drill two exploration wells on each of the fields, with Novourengoyskaya in charge of spudding the first pair.

Current recoverable reserves of the two deposits are estimated at around 200 billion cubic metres of gas.

In addition to exploration wells, the operator aims to drill 25 development wells from three clusters on the Upper Tiuteyskoye and 59 development probes from five clusters on West Seyakhinskoye, between 2020 and 2023.

Obsky LNG also intends to start preparing the construction site for the planned LNG plant and clusters, later this winter. It aims to begin building connecting roads between the well clusters, as well as a permanent year-round road link between the port of Sabetta and the West Seyakhinskoye field, it said.

Novatek announced its plan to construct a three-train plant with annual LNG output of about 5 million tonnes earlier this year.

For this project it said it plans to employ solely Russian equipment and supplies, unlike its two other LNG developments in the area, Yamal LNG and Arctic LNG 2, which have relied mainly on imported equipment and modules.

Each Obsky LNG train will use Novatek’s own liquefaction technology, known as Arctic Cascade.

The company claimed that despite the low output of each train, the technology is cost effective because of its simplicity and reliance mainly on the cold Arctic environment to chill processing gas.

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Obsky LNG will utilise the existing LNG loading terminal in Sabetta, operated by Yamal LNG, and is currently forecast to produce its first LNG before the end of 2022.

Industry analysts expect Novatek to remain the sole shareholder in Obsky LNG, which may be used by the company to increase its LNG spot sales to Europe and elsewhere, as most of Yamal LNG’s output is planned to be delivered to the Asia-Pacific region under long-term contracts.

Yamal LNG was estimated to have delivered about 9.5 billion cubic metres of gas to Europe in 2018 according to a report by London-based consultancy IHS Markit, quoted by Moscow business daily Kommersant.

That came after Yamal LNG reached its full annual production capacity almost nine months ahead of the original construction schedule and well ahead the start of delivery windows under its long-term contracts.

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