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28 Feb, 2019 14:51

Russian LNG will be cheaper for Europe than US alternative – Novatek

Russian LNG will be cheaper for Europe than US alternative – Novatek

Europe will pay half as much for liquefied natural gas (LNG) from Russia than what US energy companies offer, according to independent Russian gas producer Novatek.

Washington has been pushing its own LNG on the European market, while criticizing Russian projects, including the Nord Stream 2 gas pipeline, which is to be completed by the end of this year. However, falling for US rhetoric may affect European customers given that the price for American LNG is much higher, according to Novatek.

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The company says it has been able to deliver LNG to Europe for $3.15 per million British thermal units (mmBtu) while US producers were offering it for $7-$8, Novatek’s Chief Financial Officer Mark Gyetvay told the International Petroleum week (IP week) conference as cited by Reuters.

The Russian energy giant says it has much lower production costs than its American rivals, extracting gas at a cost of 10 cents per mmBtu against $3 in the US, and liquefying gas for 50 cents compared to America's $3.

“Russian gas will be very competitive versus the US Gulf coast,” Gyetvay told the gathering in London. He added that the energy company plans to extend annual production of sea-borne LNG by around 15 million tons to 70 million tons by 2030.

Earlier this year, Novatek’s Chairman Leonid Mikhelson vowed to cut production costs up to $750 per ton to solidify his company's advantage on the world gas market.

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While the US is mulling more sanctions targeting Russia, including against the country's LNG projects, Novatek says that it will not allow Washington to hold it “hostage” to its policy. In order to protect itself, the company pledged to build all equipment and technology in Russia.

In December 2018, the firm announced that its Yamal LNG plant in the Arctic reached full capacity of 16.5 million tons per annum. Novatek is also developing another ambitious facility for liquefying gas in the Arctic region, Arctic LNG 2.

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