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Putin on hand as Yamal ships first LNG cargo

Mon 11 Dec 2017 by Jamey Bergman

Putin on hand as Yamal ships first LNG cargo
Russian President Vladimir Putin launches the first LNG shipment from Yamal

Russian president Vladimir Putin launched the first shipment of liquified natural gas from the new Yamal LNG facility located in the Russian Arctic.

The LNG plant sold an initial cargo of 170,000 m3 to LNG shipping, trading and distribution specialist Petronas, in the UK.

The Russian leader commented on the technical complexity of the project in extensive remarks at the event.

“This is certainly a complex project, and we have good people here in this room, good professionals, who warned me at the beginning of this journey: ‘Do not do this,’” he said.

“When asked why – the first, second, third – the reasons they cited were all really serious. But those who started this project took the risk, and the risk proved to be justified, and they achieved success.”

The US$27Bn plant began operations on 5 December in Sabetta on the Yamal peninsula. It was jointly financed by Russian gas company Novatek, France’s Total and the China National Petroleum Corporation.

US sanctions against Novatek subsidiaries were a significant hurdle for project’s financing. They came as part of a response to Russia’s annexation of the Crimean Peninsula in 2014. The US sanctions bar American companies and individuals from dealing with sanctioned entities.

President Putin made oblique references to the financing difficulties surrounding the project in his speech, saying “I would like to thank our foreign friends and foreign partners (many of them are with us in this room), because without their help, without their trust in their Russian friends and partners, this project would not have happened either. I am referring to both financing and technologies. The project involved companies from the East, from Europe, all of them took an active part in it. And today's shipping, the first shipment, is our common victory.”

In a Novatek statement, chairman Leonid Mikhelson said “This event begins the process of developing and liquefying our massive natural gas resources on the Yamal and Gydan peninsulas into more than 70M tonnes of LNG. This potential gives our country an opportunity to become one of the biggest global LNG exporters.”

From 2019, the Yamal project will have a projected capacity of 16.5M tonnes per year of LNG, with the facility expected to produce 5.5M tonnes in 2018. Long-term sales contracts are set to commence in April 2018, according to a statement from Novatek, with sales before April handled on a spot basis by Yamal LNG shareholders.

Sovcomflot’s Arc7 ice-classed tanker Christophe de Margerie took the first shipment of cold fuel from Yamal.  

 

Teekay signs financing deal for Yamal LNG vessels

Six more Arc7 LNG carriers have been financed to serve the Yamal plant, according to Teekay LNG. The group completed a US$816M long-term debt facility to finance the vessels, which are scheduled for delivery from January 2018 through early-2020.

Teekay and China LNG Shipping formed a joint partnership to build the ice-classed vessels, with Teekay holding a 50% stake.

Teekay Gas Group chief financial officer Brody Speers said “With the completion of this ARC7 financing, the Partnership has now completed $2.2Bn in debt financings for our newbuildings in the past 12 months and has financed 14 of its remaining 15 LNG carrier newbuildings, which includes one floating storage unit.”   

The newbuildings will serve the Yamal LNG project under charter contracts with firm charter periods out to 2045 plus option periods, according to a statement from the group.

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