Russian independent gas producer Novatek has signed a memorandum of understanding with Chinese banks for financing of its $20 billion Yamal LNG project.
A quartet of commercial banks have agreed under the preliminary pact to consider financing of the project on the Yamal Peninsula after state-owned China National Petroleum Corporation (CNPC) came onboard as a 20% partner as part of a long-term liquefied natural gas supply deal earlier this year.
Novatek, which holds a 60% interest with French giant Total on 20%, aims to build an LNG plant with 16.5 million tonnes of annual production capacity based on feedstock resources from the South Tambeyskoye field.
The first phase, scheduled for completion in May 2016, will call for the building of two trains, each with capacity of 5 million tonnes per annum.
The addition of a third train is also envisaged that would boost total capacity to 16.5 million tpa.
The final investment decision for phase two will be made in the last quarter of 2016, with project commissioning scheduled in 2018,
Meanwhile, Russia’s Energy Ministry is reported to have drafted a proposal that would liberalise LNG exports by enabling companies other than state-run Gazprom to sell abroad.
The ministry’s proposed reforms are vital to secure financing for both Novatek’s project, with exports targeted for China, and that of Russian state-owned Rosneft, which is developing the Sakhalin LNG scheme with partner ExxonMobil in Russia’s far east.
A source familiar with the document told Reuters the proposal would allow LNG exports by companies that hold licences to build LNG plants, or to send the gas for liquefaction to a plant determined by the government.
The source also said the draft proposed allowing LNG exports by companies with state holdings of at least 50% - if they send LNG abroad from offshore fields or from production sharing agreements.
The Russian authorities previously planned to open up LNG exports from 2014, with a requirement that the projects of Novatek and Rosneft would ship gas to Asia only and not challenge Gazprom's exports to Europe.
Gazprom recently inked an agreement with CNPC on pipeline gas exports to China via the eastern route.
Under an existing 2006 law, Gazprom is the only company allowed to ship gas out of Russia.