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Russia amends legislation to facilitate new LNG projects

The State Duma has adopted amendments to the law on gas export giving the green light for further liquefied natural gas (LNG) developments and the expansion of the list of exporting companies.

The amendment initiated by the Russian government aims to boost LNG production in the Arctic by providing the right to export LNG from fields that were licensed after 1 January 2013. The changes allow the involvement of four fields in LNG production – Verkhnetiuteiskoye, Zapadno-Seyakhinskoye, Shtormovoye and Soletsko-Khanaveyskoye – with total resources of more than 1.5 trillion cubic metres of gas.

The amendment benefits the projects of LNG producer NOVATEK, whose third major LNG project, Ob-LNG is based on the gas reserves of the Verkhnetiuteyskoye and Zapadno-Seyakhinskoye fields. Acquired by Novatek-Yurkharovneftegaz in September 2017 for a period of 27 years, these fields hold a total of 157 billion cubic metres of reserves.
The legislative amendment comes as NOVATEK announced earlier that it expects to reach a final investment decision (FID) on the Ob-LNG project in the second half of 2020. The facility is expected to have two liquefaction trains with 2.5 million tons per annum of production capacity for a total of 5 million tons per year.

A subsidiary of NOVATEK, Arctic LNG-2 won the bid for a geological survey, exploration and hydrocarbons production license for the subsoil area including the Shtormovoye field in 2017. Arctic LNG 1, also a fully owned subsidiary of NOVATEK obtained the Soletsko-Khanaveyskoye field located on the Gydan peninsula in Yamal-Nenets Autonomous Region in 2019.

Novatek launched its first LNG project, the 16.5 million metric tons per year Yamal LNG, at the end of 2017 and took a final investment decision on its second, the 20 million metric tons per year Arctic 2 LNG, in September. Russian energy minister Alexander Novak described the Arctic 2 LNG as an important project for Russia which follows the country’s strategy to create capacities for LNG production.

NOVATEK’s first-quarter report for 2020 shows that exports of LNG decreased by 28,4 per cent compared with the same period last year, coinciding with the coronavirus pandemic, but the company’s CEO, Leonid Mikhelson told earlier that NOVATEK has no plans to make major changes in its Arctic projects currently under development.

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