TotalEnergies Buys Into LNG Transshipment Scheme

Novatek expects other foreign partners to soon join its LNG transshipment projects in Murmansk and Kamchatka after TotalEnergies last week signed a final deal to buy 10% in the terminals’ operator. Under the share purchase agreement signed on the sidelines of the St. Petersburg International Economic Forum on Jun. 3, TotalEnergies will buy 10% in Novatek's subsidiary Arctic Transshipment, which will operate the two 20 million metric ton/yr transshipment terminals scheduled for completion in 2022-23 (NC May6'21). The Russian LNG producer expects a Japanese consortium to join later this year, Novatek CEO Leonid Mikhelson told reporters, referring most likely to the Japan Arctic LNG consortium of Mitsui and Jogmec. Like TotalEnergies, the consortium already has 10% in Novatek’s 19.8 million tons/yr Arctic LNG 2 project, scheduled for 2023 around the same time as the two LNG transshipment terminals. The other Arctic LNG 2 shareholders are China National Petroleum Corp. and China National Offshore Oil Corp., both with 10% stakes. Mitsui’s shipping unit, Mitsui OSK Lines (MOL), has also discussed participation in Novatek’s transshipment terminals together with Japan Bank for International Cooperation, but Mikhelson said Novatek is considering an operational partnership with MOL rather than selling an equity stake to it. “The transshipment facilities will ensure the optimal utilization of our ice tanker fleet and reduce the cost of transport to consuming markets for the company's existing and future LNG projects,” Mikhelson said. The Kamchatka terminal should reduce the full marginal cost of Arctic LNG delivery to Asia, Novatek’s key target market, via the direct eastbound Northern Sea Route by 20¢-50¢/MMBtu to around $2.00-$2.20/MMBtu, which is comparable to the cost of US LNG delivery to China of $1.80-$2.00/MMBtu, he told reporters. The cost will be lower because from Kamchatka to receiving terminals in Asia, LNG will be delivered onboard cheaper and faster conventional tankers instead of more expensive and slower Arc7 ice-class vessels running across the Arctic seas. The Russian government will provide more than 21 billion rubles ($290 million) to finance the construction of a ship channel for the Kamchatka terminal, including 5 billion rubles this year, Prime Minister Mikhail Mishustin said on Jun. 7.