Russia’s Novatek said on Wednesday it signed a deal with Zhejiang Energy Gas Group to supply the Chinese firm with liquefied natural gas from its Arctic LNG 2 project.
The heads of agreement builds on the memorandum of understanding the duo signed in October 2019.
Novatek said in statement the new deal establishes the key commercial terms for the annual supply of up to one million tons of LNG from the Arctic LNG 2 project for a term of 15 years.
Moreover, Novatek’s gas and power unit will deliver LNG on a DES basis to Zhejiang Energy’s LNG terminals in China, including feedstock for the latter’s new gas-fired power generation facilities.
Zhejiang Energy is a unit of the Zhejiang Provincial Energy Group.
“The agreement is consistent with our commercial LNG strategy to diversify our client base and target end consumers in the rapidly developing Asian Pacific market,” Novatek’s chief executive and Russian billionaire Leonid Mikhelson, said.
“The fast-growing Chinese market is a key region in our LNG marketing strategy, and we plan to further increase our supplies of cleaner-burning LNG to assist China in reaching its net zero targets by 2060,” he said.
The Arctic LNG 2 project located on the Gydan peninsula includes the construction of three trains with a capacity of 6.6 mtpa, each, using gravity-based structure platforms.
Novatek plans to launch the first GBS in 2023, followed by the second in 2024, and the third in 2025.
The Russian firm is the LNG project’s operator with a 60 percent stake, France’s TotalEnergies owns 10 percent while CNPC and CNOOC of China also have 10 percent, each.
Furthermore, Japan Arctic LNG, a consortium of Mitsui & Co and Jogmec owns a 10 percent stake in the project as well.