Saudi Aramco seeks large stake in Arctic LNG-2 project in northern Russia: report

A view of Yamal LNG, in Sabetta, Arctic Russia in March 2017. Saudi Aramco, Saudi Arabia’s state energy company, is looking to buy a 30% stake in Novatek’s Arctic LNG-2 project, according to Interfax. (Olesya Astakhova/Reuters)
Russia’s energy minister welcomes Saudi Arabia’s state energy company as key commercial partner to the second gas plant on the Yamal Peninsula.

Seems like Russia’s private gas giant Novatek will have few problems finding foreign financial parters to its upcoming giga project in the Arctic. Previously, talks have been held with China’s CNPC, French Total as well as companies from Japan and South Korea.

Novatek has previously said it would keep 60% of Arctic LNG-2.

This week, Saudi Arabia’s Energy Minister Khalid Al Falih said to the country’s Al Ekhbariya TV channel that Saudi Arabia could buy 30% of Arctic LNG-2, Interfax reports (in Russian).

Arctic LNG-2 is the second of Novatek’s LNG plants on the Yamal Peninsula. The first, Yamal-LNG, started production in December last year.

The Saudi Energy Minister visited Yamal-LNG in May 2017 and a Memorandum of Understanding (MOU) was signed between Novatek and Saudi Aramco in February this year. The MOU outlined how the two companies should collaborate internationally on natural gas projects, including LNG supplies, development of LNG markets, gas exploration and production projects, as well as research and technology development.

Leonid Michelson, Chairman of Novatek’s management board, said at the time: “We see a wide array of exciting and mutually beneficial energy opportunities to cooperate with Saudi Arabia.”

Arctic LNG quickly expanding

Arctic LNG-2 is estimated to cost $20-21 billion. Together with the already commissioned $27 billion Yamal-LNG, the constructions are by far the most expensive industrial development project anywhere north of the Arctic Circle in history. Planned start-up date of the first line is 2022-23, followed by line two and three in 2024 and 2025.

Work is already underway to build a supply base for Yamal LNG-2 north of Murmansk, in northwestern Russia. The so-called Kola Yard will both have a key-role in constructing the liquified natural gas plant itself, and serve for gas tanker reloading when production at the Yamal Peninsula starts.

Working on commercial cooperation

Russia’s Energy Minister, Aleksandr Novak, told reporters that Saudi Arabia’s interest in teaming up with Novatek for Arctic LNG-2 is part of projects considered under the two countries’ road map for commercial cooperation. Novak welcomed the project, which would be the first large concrete project between the two countries petroleum companies.

Russia and Saudi Arabia are the world’s two largest oil producers.

Related stories from around the North:

Canada: Ottawa signals it’s open to talks on offshore Arctic oil and gas development, Radio Canada International

Finland: Finland’s first silver mine to start production next year, Yle News

Norway: Drilling confirms major oil discovery for Lundin in Norway’s Arctic waters, The Independent Barents Observer

Russia: Gazprom Neft’s oil shipments hit 20-million-ton mark through Russia’s Arctic waters, The Independent Barents Observer

Sweden: Sweden reluctantly greenlights construction of Nord Stream 2 gas pipeline, Radio Sweden

United States: US Gov preparing for oil exploration in Alaska’s Arctic National Wildlife Refuge, Alaska Public Media

Thomas Nilsen, The Independent Barents Observer

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

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