Russia's largest independent gas producer Novatek has reported continuing recovery in natural gas and condensate production in the second quarter and first half of this year compared with same periods of 2020.
The ability of the company to withstand challenging market conditions is closely watched by its investors, banks and international partners, as Novatek has to generate healthy profits to be able to bankroll its global liquefied natural gas ambitions and service its debts.
The company said its total gas output, including its share in the flagship Yamal LNG project and other joint developments, increased by almost 7% to more than 40.1 billion cubic metres of gas between January and June this year against the same period of 2020.
Production of condensate also increased by upwards of 4% to about 254,000 barrels per day in the first half of 2021 against the first six months of last year.
The pace of output growth accelerated in the second quarter this year versus the same period of 2020, with gas and condensate production up by 8% and 7% respectively.
Meanwhile, gas sales to the Russian domestic market were up 7% to almost 35 Bcm in the first half of this year compared with the same period of 2020, Novatek said.
The company, which claims to have one of lowest gas finding and development costs in Russia's energy industry, has traditionally viewed the domestic market as a generator of cash to underpin the required investments for its capital intensive LNG export projects.
The first of these, Yamal LNG, is already operational, with Novatek and its international partners readying to commission their second project, Arctic LNG 2, between 2023 and 2025.
However, Novatek also acknowledged a decline in its international spot gas sales in the first half of the year as customers in Asia and Japan increased LNG offtake volumes under their long-term supply contracts with Yamal LNG.
A larger share of LNG deliveries under long-term contracts leaves less volume of LNG from the project for Novatek that usually markets it on a spot basis in Europe and elsewhere in the world.
European LNG retail plan
Besides spot LNG sales from Yamal LNG to Europe, Novatek also operates an alternative LNG supply route to European customers via a liquefaction plant and export terminal in the Baltic port of Vysotsk.
The Vysotsk plant is capable of producing up to 660,000 tonnes per annum of LNG, fully covering Novatek’s ambitions to build a network of 30 LNG retail fuelling stations in Germany and Poland.
Novatek earlier said that 13 LNG stations from this planned network are already in operation.
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