Novatek sheds light on its next major Arctic gas project

By Atle Staalesen, The Independent Barents Observer - August 10, 2017

As the Russian gas company Novatek prepares for launch of the Yamal LNG, the large natural gas project in the Yamal Peninsula, it is actively proceeding with ground work for its second major project in the Arctic.

The Arctic LNG-2 will be based on gas resources from the Gydan Peninsula and have an annual production capacity of 18 million tons. It will have a price tag of $10 billion and be ready for production late 2022, Neftegaz reports.

A general view shows Yamal LNG, Russia's second liquefied natural gas plant, under construction in Arctic port of Sabetta, Yamalo-Nenets district, Russia March 30, 2017. Picture taken March 30, 2017. REUTERS/Olesya Astakhova
A general view shows Yamal LNG, Russia’s second liquefied natural gas plant, under construction in Arctic port of Sabetta, Yamalo-Nenets district, Russia March 30, 2017. (Olesya Astakhova / Reuters)

Meanwhile, the Yamal LNG, which is due to be launched late this year, will have a production capacity of 16.5 million tons per year and cost almost three times more — about $27 billion. While the Yamal LNG is built as a land-based facility on the western bank of the Gulf of Ob, the Arctic LNG-2 will be based on a floating platform solution.

The floating Arctic LNG-2 production plant will be built at the new Kola Yard outside Murmansk, and when finished transported to the production site in the Gulf of Ob where it will be connected with local infrastructure and communications.

The company in July informed that it was launching construction of the Kola Yard. The plant will reportedly cost 50 billion rubles (€800 million). It will be built on a 150 hectare plot near Belokamenka, a site only few kilometers from the City of Murmansk.

In June, a government decree signed by Prime Minister Dmitry Medvedev gives Novatek the right build four artificial islands in the adjacent waters in the Kola Bay. At the same time, the first construction machinery arrived to site and a tender announcement was made for the construction of sea terminal installations, bank protection measures and other objects in the area.

Murmansk Governor Marina Kovtun cheered and said Novatek’s project in the region will pave the way for the creation of 10,000 new jobs, increase tax revenues to budgets on all levels, attract investments to the region and develop new high-tech production capacities

The Arctic LNG-2 will be built by Russian companies, Novatek underlines. However, foreign companies will “deliver services” to the Russian general contractors.

In connection with the project front end engineering and design (FEED) contracts have been signed with companies SPG Novainzhiniring, NIPIGAZ, Technip, FMC and Linda AG, Neftegaz informs.

The FEED is to be ready in 2018 and a final investment decision completed in 2019.