Russia's Novatek to Supply 3M Tons of LNG per Year to CNPC

Reuters

MOSCOW, Oct 22 (Reuters) – Russia's No.2 gas producer Novatek said on Tuesday it had concluded an outline agreement to supply three million tonnes per year of liquefied natural gas (LNG) to China National Petroleum Corp (CNPC) from its Yamal LNG project.

The deal is crucial for Novatek and is in line with Russian government requirements on securing supply contracts for LNG projects as a precondition for opening up exports of the tanker-shipped fuel.

The government is working on amendments to liberalise LNG exports – now the preserve state-owned Gazprom – from the start of next year. The necessary changes to a 2006 law on gas exports have still to go before parliament.

Russia, the world's top producer of conventional gas, has been developing closer ties with China, the leader in energy consumption.

"From our side, we welcome the achievement of a mutually beneficial agreement on LNG supplies to the fast growing Chinese market," Novatek's Chief Executive Officer Leonid Mikhelson said in a statement.

The deal covers a period of 15 years, with pricing linked to the so-called Japanese crude cocktail – a benchmark based on oil prices.

Yamal LNG, being developed by Novatek, Total and China's CNPC, is scheduled to start producing LNG in 2016 with a view to supplying 16.5 million tonnes of the tanker-shipped fuel by 2018.

(Reporting by Vladimir Soldatkin; Editing by Douglas Busvine)

Copyright 2017 Thomson Reuters. Click for Restrictions.

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