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19 Dec, 2018 14:22

Italian money to back Russia's liquefied natural gas project in Arctic

Italian money to back Russia's liquefied natural gas project in Arctic

Russia's energy giant Novatek and Italian SACE Export Credit Agency have sealed an agreement on strategic cooperation in the liquefied natural gas (LNG) projects, including Arctic LNG 2, the Russian company said on Wednesday.

“Novatek and SACE signed a Memorandum on Strategic Cooperation... in relation to the Company's current and future LNG projects. The parties agreed to develop long-term cooperation on the Arctic LNG 2 project and potential new LNG projects involving Italian suppliers and engineering companies,” according to a Novatek’s statement.

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The step creates new opportunities for mutually beneficial cooperation with Italian businesses on our future LNG projects, according to Novatek chief executive Leonid Mikhelson.

“We are successfully cooperating with SACE in the financing of our Yamal LNG project. We welcome the interest of international export credit agencies to participate in the financing of our Arctic LNG projects,” Mikhelson said.

The Yamal LNG project, launched last December, operates three production lines with a total capacity of 16.5 million tons of LNG per year. Almost 96 percent of the Yamal LNG plant’s production has already been contracted. Besides Novatek, Yamal LNG’s shareholders also include France’s Total, China’s CNPC and the Silk Road Fund.

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Apart from SACE, the Russian company has managed to raise funding from a number of foreign financial institutions, including the Japan Bank for International Cooperation, Italian banking group Intesa and French credit insurer Coface, Mikhelson said.

All in all, Novatek has signed supply contracts worth 600 billion rubles (nearly $9 billion) for building the fourth natural-gas-liquefaction line at its Yamal LNG plant, according to Mikhelson, who expects the amount to rise. The CEO added that most of the contracts are focused on supplies by Russia’s producers.

In addition, Novatek, Russia's largest independent natural gas producer is developing the Arctic LNG 2 project on the Gydan Peninsula in Northern Siberia. With a production capacity of approximately 19.8 million tons per year, Arctic LNG 2 is expected to unlock over seven billion barrels of oil equivalent of hydrocarbon resources.

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