Russia's Yamal LNG project on track and on budget, says Novatek.

Russia’s Yamal LNG project, to build the country’s second gas liquefaction plant, is on track and on budget with Novatek and its partners having invested $18.5 billion so far, Novatek’s CEO said.

The first phase of the project, in which Novatek is in partnership with France’s Total and China’s CNPC and the Silk Road Fund, is due to start operation some time next year and Novatek’s chief executive said it was 76 percent ready.

Russia is the world’s biggest producer of conventional gas after the United States but wants to increase its production of liquefied natural gas (LNG), which currently accounts for less than 5 percent of world output.

Investment in the Yamal project, which will require $27 billion in total, was at risk after Novatek came under Western sanctions over Moscow’s role in the Ukraine crisis, but the project has since secured funding from Chinese and Russian banks, as well from the Russian government.

“To date, we have resolved all issues related to Yamal LNG’s financing,” Leonid Mikhelson, Novatek’s chief executive and a major shareholder, told reporters in comments cleared for publication on Monday. “In my opinion, we should implement similar projects on our own, not using (Russia state) budget financing in the future.”

The Yamal facility will have three production lines when it is completed, each with an annual capacity of 5.5 million tonnes of LNG.

In April, Yamal LNG signed loan deals with Chinese banks worth over $12 billion. It also secured Russian state funds worth 150 billion roubles ($2.3 bln) from a rainy day fund and 3.6 billion euros ($4 bln) from state-controlled Russian lenders Sberbank and Gazprombank.


THE FINANCIAL EXPRESS