Novatek inks domestic small-scale LNG deals

Russian LNG producer Novatek said it has signed two domestic small-scale deals to boost use of liquefied natural gas as fuel for vehicles and for supply to off-grid customers.

According to a statement by Novatek on Friday, the firm led by Leonid Mikhelson signed small-scale LNG cooperation agreements with the governments of the Moscow and Samara regions.

Novatek said the partners are looking to expand the use of LNG as motor fuel and for gas supply to off-grid customers, including the construction of small-scale LNG plants and relevant sales infrastructure.

“The use of LNG in transportation and for gas supply will improve the economic efficiency,
reduce environmental footprint and enhance security of power supply, as well as make a
positive contribution to social and economic situation in the regions where we operate”, Mikhelson said in the statement.

“Development of the domestic LNG market is a prospective business line for the company, that will help effectively monetize our abundant natural gas reserves as well as pioneer Russian technologies and equipment,” he said.

Gazprom deal

Besides these deals, Novatek said in a separate statement it has signed an agreement with compatriot Gazprom on cooperation in sustainable development of Russia’s Arctic.

The two firms aim to cooperate in environment protection, biodiversity preservation,
environmental monitoring, standardization in the area of environmental safety, hydrogen
energy and support of the indigenous peoples of the North, it said.

“Joint activities with Gazprom under this agreement will focus on arranging continuous
monitoring of pinniped habitats in the Ob Bay and the Northern Sea Route water area.
Cooperation of major subsoil users in the Russian Arctic will foster preservation of the region’s ecosystem, its social and economic development,” Mikhelson said.

Novatek operates the giant Yamal LNG project and is building the Arctic 2 LNG facility.

It previously expected to launch the first Arctic 2 LNG train in 2023, followed by the second and the third unit in 2024 and 2025, respectfully.

However, this schedule might change due to challenges in implementing the project and following several sanctions from the EU and the US over the Russia-Ukraine war.

Local media reports suggest that Mikhelson said last week that Novatek still expects to launch the first Arctic LNG 2 GBS in 2023, but the schedule for the other two units could change.

Kommersant also reported that Baker Hughes has decided to stop all engineering services to Russian LNG projects, including Novatek’s Yamal LNG and Arctic 2 LNG projects, as well as the Gazprom-operated Sakhalin 2 LNG plant.

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