Russian independent Novatek has vowed to plough ahead with its liquefied natural gas development plans as it sees a potential tightening of global LNG supplies amid strong demand and energy transition moves.
Speaking on a conference call this week in Moscow, deputy chairman Mark Gyetvay said the company “remains absolutely committed to its portfolio strategy to deliver up to 70 million tonnes of LNG” per annum by 2030.
“Energy transition combined with growing economic activities in Asia and Pacific will remain significant contributing factors to future LNG demand growth, as well as supporting natural gas as the primary clean burning fossil fuel within the future total energy mix,” he said.
Novatek estimates that global LNG consumption could hit around 365 million tonnes this year, which is about 2% — or eight million tonnes — higher than in 2019.
Gyetvay termed this “a positive development" considering the effect of demand from the coronavirus pandemic.
Hopes to outperform
Novatek is expected to outperform the Russian gas industry this year to post a 2% rise in gas production against an expected 9% to 10% decline in the country’s gas output.
Despite some cancellations of LNG spot cargoes in the second quarter, Novatek's flagship project, Yamal LNG, operated at an average of 113% of capacity between January and September, Gyetvay said.
Eastward delivery to Asia will grow with Novatek’s next major project, Arctic LNG 2, coming on line between 2023 and 2026.
New LNG ice-breaking carriers
Novatek’s recent orders of new LNG carriers with ice-breaking capacity in South Korea and Russia are expected to allow it to deliver 80% of its upcoming output to the key Asia Pacific region, where demand for gas is anticipated to grow faster than in Europe.
Novatek has contracted with Daewoo Shipbuilding & Marine Engineering to build two floating gas storage units of 360,000 cubic meters capacity each for transshipment terminals on the Kamchatka Peninsula in far east of Russia and near the port of Murmansk in the north.
Arctic LNG 2 progress
Gyetvay said that overall construction completion at Arctic LNG 2 is estimated at 27% at the end of September, up from 21% at the end of June.
The first train’s overall construction — including construction of a concrete gravity based platform (GBS), module fabrication and facilities on site — is roughly 39% complete.
Novatek expects no delays in deliveries of LNG topsides modules as about 7000 workers have been mobilised at the module construction sites in China.
“These yards are producing at full capacity today,” he said.
The first modules for GBS 1 are expected to arrive at Novatek’s construction yard in Murmansk around September next year.
Accordingly, the launch of the first train is scheduled for 2023 and Novatek sees no delays in meeting this target.
“We also see no delays in launching the next trains on GBS 2 and GBS 3 in 2024 and 2026,” Gyetvay said.