On June 29, 2019 during the G20 summit in Osaka Novatek and the consortium of Mitsui & Co and Japan Oil, Gas and Metals National Corporation (JOGMEC) signed a sales and purchase agreement to purchase a 10% participation interest in the Arctic LNG 2 project. The document was signed in the presence of the President of Russian Federation Vladimir Putin, and the Prime Minister of Japan Shinzo Abe. The participation in the Project also provides for the long-term LNG offtake of approximately 2 mn tons per annum by the Japanese partners. The Agreement is expected to close in the near future subject to regulatory approvals.
“We welcome the consortium of Mitsui and JOGMEC as partners in our Arctic LNG 2 project,” commented Leonid Mikhelson, Chairman of the Novatek Management Board. “Japan has 50 years of experience with importing LNG and is one of the largest LNG consuming countries. Moreover, Japanese companies have extensive experience in implementing LNG projects as well as marketing LNG around the world. The entry of Japanese partners into Arctic LNG 2 will contribute to its successful implementation”.
The share in Arctic LNG 2 will be acquired through Japan Arctic LNG B.V., a Dutch company, in which Mitsui has invested jointly with JOGMEC (established in May 2016, the head office is in Amsterdam). The acquisition will be completed as soon as the relevant regulatory approvals have been obtained. The equity ratio of JOGMEC and Mitsui will be set at 75% and 25% respectively.
The Arctic LNG 2 project envisages constructing three LNG trains at 6.mn million 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 billion cubic meters of natural gas and 57 million tons of liquids. Under the Russian classification reserves totaled 1,978 billion cubic meters of natural gas and 105 million tons of liquids. OOO Arctic LNG 2 owns an LNG export license.
The new deal taken into account, Novatek will own 60% in the project, Japan Arctic LNG B.V. will have 10%, Total 10%, CNPC 10%, and CNOOC 10%.
Novatek’s estimate of the total development cost is currently around $21-23 bn.