Novatek signs deal to sell gas from Arctic LNG 2 to Chinese firm

Shenergy Group will buy 3 million tons of LNG from the new project over a 15-year period.

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The logo of Russian gas producer Novatek is seen on a board at the St. Petersburg International Economic Forum (SPIEF), Russia, June 6, 2019. (Maxim Shemetov / Reuters File Photo)

Russian natural gas company Novatek announced on Thursday a long-term deal to sell liquefied natural gas from its second major Arctic project — still under construction — to a Chinese company.

The 15-year deal allocates 3 million tons of LNG to China’s state-owned Shenergy Group, which would amount to about three shipments a year, an industry source told Reuters.

“The LNG volumes produced from our Arctic LNG 2 project is core to our long-term objective of delivering affordable, secure and sustainable natural gas for many decades,” Notakek Chairman Leonid Mikhelson said in the release.

Novatek already operates the Yamal LNG plant in Russia’s Arctic, and has a target date of 2022 or 2023 to launch production at Arctic LNG 2, its second major Arctic gas project on the nearby Gydan Peninsula. It secured the financing for the second project, which includes investors from France, Japan and China, last fall.

The company is also ordering more ice-capable LNG tankers to deliver gas from the Yamal and Arctic LNG 2 projects to markets in Asia and Europe. It has increasingly sailed such vessels on the Northern Sea Route in winter months — and could eventually do so without icebreaker escorts.