Chinese mega-deals in Yamal LNG

A picture taken on April 16, 2015 shows a general view of the port of Sabetta in the Kara Sea shore line on the Yamal Peninsula in the Arctic circle, some 2450 km of Moscow. The Yamal LNG (liquefied natural gas) project aiming to extract and liquefy gas from the Yuzhno-Tambeyskoye gas field is scheduled to start production in 2017. Russia's Novatek holds a 60 percent stake in the venture. France's Total and China's CNPC hold 20 percent each. (Kirill Kudryavtsev/AFP/Getty Images)
The Arctic port of Sabetta on the Yamal Peninsula, some 2450 km from Moscow. The Yamal LNG project will extract and liquefy gas from the Yuzhno-Tambeyskoye gas field and is scheduled to start production in 2017. (Kirill Kudryavtsev/AFP/Getty Images)
Novatek lands historic $12 billion credit deals with Chinese banks.

Project operator Novatek in March made clear that «several big deals» were in the pipeline. Those deals are now landed, and the company has the cash it needs for the development of the grand Arctic gas project.

The money comes from the Export-Import Bank of China and the China Development Bank. The 15-year loan deals include 9.3 billion euros ($10.6 billion) and 9.8 billion yuan ($1.5 billion), Vedomosti reports. 

$27-billion price tag

The euro-denominated part of the loan is being made at 3.3 percent above the European benchmark 6-month EURIBOR rate at the construction stage and 3.55 percent above thereafter. The renminbi loan is being made at 3.3 percent above China’s 6-month SHIBOR benchmark, and then 3.55 percent above

The Chinese credit deals come less than three weeks after Novatek signed a €3.6 billion dealwith the Russian banks Sberbank and Gazprombank.

The total price tag of the Yamal LNG is estimated to $27 billion of which the project shareholders already have contributed with $15 billion.

Production start 2017

The Yamal LNG project has a project target production of 16,5 million tons of LNG per year. Production start is due in November 2017.

Also the Russian government has invested heavily in the Yamal project. More than 47 billion rubles (€630 million) of state money has been invested the Sabetta port and adjacent infrastructure. The project infrastructure also includes the development of a 50 km long sea channel stretching into the peninsula.

The Sabetta port will be built to handle more than 30 million tons of goods per year. It is to be operational all-year-round, despite the highly complex ice conditions of the Ob Bay.

The Yamal LNG project is operated by Novatek (50,1%) in partnership with Total (20%), CNPC (20%) and the Silk Road Fund (9,9%).

Related stories from around the North:

Canada:  Energy challenges in Canada’s North, Eye on the Arctic

Finland:  Chinese energy giant plans €1bn biofuel plant in northern Finland, Yle News

Norway: OMV finds more oil in Barents Sea, The Independent Barents Observer

Russia:  Lukoil brings its Arctic oil to Murmansk, The Independent Barents Observer

Sweden:  Will Sweden be able to produce enough energy in the future?, Radio Sweden

United States: Obama, Trudeau announce plans to fight Arctic oil and gas pollution; Alaskans criticize lack of input, Alaska Dispatch News

Atle Staalesen, The Independent Barents Observer

For more news from the Barents region visit The Independent Barents Observer.

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