Russia readies auction of large gas block near Novatek's huge LNG projects
Block eyed by Novatek for plan to become a global LNG supplier with reduced carbon footprint
Authorities in Russia are to auction a large oil, condensate and gas block on the Gydan peninsula in West Siberia, with local gas independent giant Novatek strongly positioned as it hunts gas for its huge liquefied natural gas projects in the region.
The block on offer — North Gydansky — spans over 6500 square kilometres in both onshore and offshore areas in Gydan Bay.
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According to state subsurface resources agency Rosnedra, the winner will be granted a 30-year exploration and development licence.
The block had been partially explored in the first half of 1980s, with one dry well drilled and three potential structures identified for further drilling.
However, based on its similarities to other explored acreage in the region, Rosnedra has estimated its possible in-place resources at 1.2 trillion cubic metres of gas and about 1.5 billion barrels of oil and condensate.
Rosnedra will accept bids until 5 March, with the initial starting price for the licence set at 705 million roubles ($9.5 million). The auction will take place on 24 March.
Novatek in strong position
Rosnedra has tailored the terms of the auction to suit Novatek’s ambitions to include the North Gydansky block into its long-term plans to build several large liquefied natural gas plants on the Yamal and Gydan Peninsulas.
According to Rosnedra, any potential bidder will have to forward all gas to be produced at the block for liquefaction at nearby LNG facilities.
Gas fields that are located near the North Gydansky acreage — such as Gydanskoye and Shtormovoye and the Salmanovsky block — are already licenced to Novatek.
The North Gydansky block is expected to be put into development after 2030, after Novatek commissions its Obsky LNG, Arctic LNG 2 and Arctic LNG 1 projects.
Novatek expects that in the long term, about 10 large gas blocks on the Gydan Peninsula — together with the existing Yamal LNG and upcoming Obsky LNG developments on the Yamal Peninsula — will be able to underpin its ambitions to produce between 100 million and 120 million tonnes per annum of LNG.
Greener plans
Despite the global transition towards renewable energy sources, Novatek remains optimistic over its ability to market LNG to international markets.
The company has embraced initiatives to reduce its carbon footprint from gas production by converting gas-fired turbines at LNG plants to using a mixture of gas and hydrogen.
Earlier this week, Novatek said that it signed a strategic partnership agreement with Italy’s Nuovo Pignone, a Baker Hughes subsidiary, to join efforts in this initiative.
Earlier, Novatek announced similar agreements to reduce carbon dioxide emissions and investigate production and sales of hydrogen with Germany’s Uniper and Siemens Energy.
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