Novatek to launch full-scale operations at 4th Yamal LNG train

Russian independent producer Novatek plans to launch full operations at its fourth Yamal LNG train in the upcoming weeks as the giant project continues to outperform.

The 900 thousand tons per annum unit started pilot LNG production in December last year adding to the three 5.5 mtpa units already in production at the plant in the Russian Arctic.

“Currently, the commissioning process is ongoing, including final production processing testing in order to optimize the liquefaction process,” Novatek’s finance chief Mark Gyetvay told analysts last week during a conference call discussing the firm’s 2020 results.

“We are going to start full-scale production in the upcoming weeks,” he said.

The new train comes with Novatek’s own proprietary technology.

Novatek’s chief executive and Russian billionaire Leonid Mikhelson said during the call the unit has a “whole series of completely new pieces of critical equipment”, adding that Russian companies developed and customized that equipment at company’s request.

“That’s why the commissioning and testing of that equipment required longer time compared to standard equipment testing,” he said.

“I assume that Train 4 has to be run for a year, a year and a half, for us to understand its economics in order to scale it up further,” Mikhelson said.

Yamal LNG breaks records

In the meantime, as Novatek prepares the new unit, Yamal LNG continues to outperform.

The facility produced about 18.8 million tons of LNG and operated about 114% of its nameplate capacity on an annualized basis last year, according to Gyetvay.

“Yamal LNG loaded and dispatched 255 cargoes or 18.6 million tons of LNG, along with 24
cargoes of gas condensate or roughly one million tons,” he said.

At year-end, the LNG shipments since inception totaled 624 cargoes for an aggregate volume of 45.6 million tons of LNG.

“Yamal LNG has been an extraordinary success for Novatek and our partners,” Gyetvay said.

Besides Novatek that holds 50.1 percent in Yamal LNG, other shareholders include France’s Total and China’s CNPC with a 20 percent stake, each, and the Silk Road Fund that owns a 9.9 percent share.

In the fourth quarter, Yamal LNG dispatched 66 cargoes for a total volume of slightly more than 4.8 million tons. Out of these, 55 cargoes or 84 percent were sold under long-term contracts while 11 cargoes or 16 percent were spot deals, the CFO said.

In comparison, in the third quarter, Yamal LNG dispatched 61 cargoes or 4.3 million tons, of which 64 percent were long-term contracts and 36 percent of the cargoes were spot sales, he said.

Early NSR transit

Gyetvay said that all of the 15 Arc7 ice-class tankers serving the Yamal LNG project operated “successfully” throughout 2020.

“We extended the time limits on the Northern Sea Route (NSR) this past year by opening the navigational season one month earlier in May,” he said.

The firm also completed a series of “historic voyages” by delivering LNG to the Asian Pacific region with 2 cargoes in December and 2 cargoes in January 2021.

“The traditional navigation season generally ends in November. In 2021, we are planning to
open the upcoming NSR navigational season earlier in either April or early May together
with Sovcomflot,” he said.

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