Factbox: The Russian Arctic LNG project targeted by U.S. sanctions

Deepak Fertilisers and Petrochemicals

03/11/2023 14:09

Nov 3 (Reuters) - The United States has imposed sweeping
new sanctions on Moscow over the conflict in Ukraine, including
on the planned Arctic LNG-2 plant as it targets Russia's energy
sector.
    Following are some facts about the Arctic LNG-2 project:
    
    PLANT
    The plant is located on the Gydan Peninsula in the Arctic
and will have three operational lines with a capacity of 6.6
million metric tons of liquefied natural gas (LNG) each.
    Novatek, Russia's largest LNG producer, plans to start
production by the end of this year. The second and third lines
are due to start operations in 2024 and 2026 respectively.
    Arctic LNG-2 would be Russia's third large-scale project for
producing LNG after a Gazprom  GAZP.MM -led Sakhalin 2 plant in
Russia's Pacific and Yamal LNG controlled by Novatek. It is
designed to help Russia achieve its goal of gaining 20% of the
global LNG market by 2035, up from around 8% currently.
    
    SHAREHOLDERS
    Arctic LNG-2 is led by Novatek  NVTK.MM  which holds a 60%
stake. Other shareholders include French energy major
TotalEnergies  TTEF.PA , China's CNPC and CNOOC Ltd  0883.HK  as
well as Japan Arctic LNG - a consortium of Mitsui & Co, Ltd.
 8031.T  and JOGMEC - each holding a 10% stake.
    Investors will be able to sell LNG in accordance with their
shares. Novatek will have the right to sell 11.9 million tons of
LNG per year from the project. Other shareholders will be able
to sell 2 million tons each.
    
    INVESTMENTS
    Investments are valued at up to $21 billion. 
    Novatek had initially planned to raise some 9.5 billion
euros ($10.11 billion) in project financing from both Russian
and foreign banks. 
    But after Moscow started what it calls its special military
operation in Ukraine in February 2022, international banks and
shareholders halted financing due to sanctions.
    
    LNG CONTRACTS 
    Arctic LNG-2 has a licence for LNG exports from Russia.
    As of early November, according to public information,
Novatek has secured 4.3 million tons of LNG sales per year.
    Novatek and India's Deepak Fertilisers and Petrochemicals
Corporation signed a non-binding memorandum of understanding
(MoU) on the supply of LNG and low-carbon ammonia in February
2023. No sales volumes have been disclosed.
    In January 2022, Novatek signed a deal with China's ENN
Natural Gas to supply around 0.6 million tons of LNG per year
for 11 years.
    In June 2021, Novatek and Glencore  GLEN.L  signed an
agreement on long-term LNG supplies of 0.5 million tons per year
to terminals in Eastern Asia.
    In June 2021, Novatek and China's Zhejiang Provincial Energy
Group signed an agreement, which built on an MoU signed in
October 2019 and established key commercial terms for annual
supply of up to 1 million tons of LNG from the Arctic LNG-2
project for a term of 15 years.
    In February 2021, Novatek Gas & Power Asia agreed with
China's Shenergy Group to supply about three million tons of LNG
over a duration of 15 years, or about three LNG cargoes a year.
    In April 2019, Novatek and Vitol signed an agreement which
may result in a 15-year deal on supplies of 1 million tons of
LNG per year.
    In April 2019, Novatek and Repsol signed an agreement, which
may open up the possibility for a 15-year deal on supplies of 1
million tons of LNG from Arctic LNG 2 and other Novatek
projects.
($1 = 0.9393 euros) 

 (Reporting by Oksana Kobzeva; Writing by Vladimir Soldatkin;
Editing by Andrew Osborn and Alexander Smith)
 ((vladimir.soldatkin@thomsonreuters.com; twitter:
@vsoldatkin;))