Novatek and Total have signed a sales and purchase agreement on the sale of a 10% participation interest in the Arctic LNG 2 project, within the binding agreement, signed at the 22nd St. Petersburg International Economic Forum in May 2018. According to Novatek, the transaction is to be closed by the end of first quarter of 2019.
The Arctic LNG 2 project has made significant development progress since May 2018. Front-end engineering and design (FEED) work was completed in October confirming the preliminary cost estimates between $20 bn and $21 bn, Novatek reports.
Additional exploration drilling confirmed significant reserve growth at the Project’s Utrenneye field, and accordingly, the Russian state reserves commission subsequently increased the field’s natural gas reserves to approximately 2 trillion cbm under the Russian reserves classification.
Total consideration includes a payment for the 10% participation interest as well as financing for the Project through the capital of Arctic LNG 2.
“We have worked closely with TOTAL for many years and have built a good working relationship based on mutual trust and respect. We are pleased to further develop our successful cooperation with them on our new Arctic LNG 2 project“, noted Leonid Mikhelson, Chairman of the Novatek Management Board. “The Project’s vast conventional reserve base, advanced engineering and design work, and innovative LNG design combined with our experience in implementing large-scale LNG projects in the Arctic region is part of our strategy for creating sustainable shareholders value.”
The Arctic LNG 2 project envisages constructing three LNG trains at 6.6 mn tons per annum each, using gravity-based structure (GBS) platforms. The project is based on the hydrocarbon resources of the Utrenneye field. As of 31 December 2018, the Utrenneye field’s 2P reserves under PRMS totaled 1,138 mn cbm of natural gas and 57 mn tons of liquids. Under the Russian classification, the reserves totaled 1,978 bn cbm of natural gas and 105 mn tons of liquids.