Russian oil and gas company Novatek has made a final investment decision for the development of the $21.3 billion Arctic LNG 2 project, using gravity-based structure (GBS) offshore platforms in the Ob Bay in Russia.
The project will develop the Utrenneye field and the construction of a natural gas liquefaction plant on the Gydan Peninsula in the Russian Arctic region.
The LNG plant will consist of three liquefaction trains with an overall production capacity of 19.8 million tons per year.
The launch of LNG train #1 is scheduled for 2023, with LNG trains #2 and #3 to be launched in 2024 and 2026, respectively. Capital expenditures to launch the project at full capacity is estimated at $21.3 billion equivalent.
According to Novatek, the construction of the offshore gravity-based structures, assembly, and installation of LNG modules will be performed at NOVATEK-Murmansk’s LNG Construction Center located near Belokamenka in the Murmansk Region.
TechnipFMC, Saipem, NIPIGAs to build infrastructure
A consortium of TechnipFMC, Saipem and NIPIGAS (Russia) was awarded the contract on engineering, procurement and construction of the LNG plant (EPC contract), with the design and construction of gravity-based structures to be built by the Russian company SAREN, a joint venture of RHI Russia and Saipem.
Novatek said that more than 90% of long-lead items (including cryogenic heat exchangers, gas turbines, and the compressors for the liquefaction trains) have been ordered. Drilling of production wells, construction of roads and the field’s production infrastructure have been started.
“Novatek has emerged as one of the key players of the global LNG market with the successful launch of Yamal LNG,” noted Novatek’s Chairman of the Management Board Leonid Mikhelson.
“Today, we have taken another step forward in our goal to become one of the largest LNG producers in the world by approving the final investment decision on our second large-scale LNG project – Arctic LNG 2.
“We are confident that the accumulated construction experience, state-of-the-art technologies, proven logistics solutions and partnerships with best-in-class international companies will ensure the effective implementation of our new LNG project. Our long-term strategy is to develop our vast low-cost hydrocarbon resources on the Yamal and Gydan peninsulas, as well as to maximize our cost competitiveness across LNG markets.”
Novatek owns a 60% stake in the project, with partners being Total (10%), CNOOC (10%), CNPC (10%) and a Mitsui-Jogmec consortium, Japan Arctic LNG (10%). France’s Total also owns an 11.6% indirect participation in the project through its 19.4% stake in Novatek, thus an aggregated economic interest of 21.6% in the project.
“Arctic LNG 2 will leverage the success of the Yamal LNG project and will deliver competitive LNG to the markets in four years’ time,” commented Patrick Pouyanné, Chairman and CEO of Total.
“Arctic LNG 2 adds to our growing portfolio of competitive LNG developments based on giant low-cost resources primarily intended for the fast-growing Asian markets.”
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