Novatek's Gas Production Grows

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Novatek’s natural gas production increased 5.6% on the year to 20.15 billion cubic meters in the first quarter of 2021 on higher domestic demand, the Russian company said Monday, citing preliminary estimates. Novatek is Russia’s LNG export champion, but the growth in gas production is understood to have come from non-LNG projects in the company’s legacy production area of Nadym-Pur-Taz in West Siberia, focused on pipeline gas supplies to domestic customers (LNGI Mar.30'21). Domestic demand has been strong this past winter due to cold weather. Novatek’s domestic sales rose 7.2% on the year to 19.56 Bcm in January-March, the company said. LNG export sales decreased 23.7% year on year to 1.87 Bcm in the first quarter. Novatek attributed the decline to the fact that its flagship Yamal LNG plant in the Arctic further decreased the shareholders’ share, including Novatek’s share, of LNG sales on spot markets, and increased the share of direct sales under long-term contracts (LNGI Jan.19'21). Novatek owns 50.1% in Yamal LNG, but sells 60% of spot cargoes, as China’s Silk Road Fund, which holds 9.9% in the project, acts solely as a financial investor and sells no spot cargoes. France’s Total and China National Petroleum Corp. sell 20% of spot cargoes each, according to their equity stakes. Novatek’s trading arm Novatek Gas & Power also offtakes 2.4 million tons per year from Yamal LNG under a long-term deal, which it resells under separate long-term deals to Royal Dutch Shell, Engie and Gunvor. The company’s production of liquids -- oil and gas condensate -- increased nearly 3% on the year to 3.13 million tons (254,500 b/d) in the first quarter. Total hydrocarbon production increased 5.3% on the year to 158.1 million boe in the first three months, Novatek said. Vitaly Sokolov, Moscow Novatek Q1'21 Operational Results Production* Q1'21 Q1'20 %Chg. Natural Gas (Bcm) 20.15 19.08 5.6% Liquids (million tons) 3.13 3.05 2.7 Total Hydrocarbons (million boe) 158.10 150.20 5.3 Total Hydrocarbons (million boe/d) 1.76 1.65 6.4 Natural Gas Sales (Bcm) Q1'21 Q1'20 %Chg. Domestic Sales 19.56 18.24 7.2 LNG Exports 1.87 2.45 -23.7 Total Sales 21.43 20.69 3.6% *Including proportionate share in the production of joint ventures. Source: Novatek.

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