Shell and Novatek sign Yamal LNG supply deal

OREANDA-NEWS. June 09, 2015. Shell has signed a 20-year supply contract to take 900,000 t/yr from Russian independent natural gas producer Novatek's planned 16.5mn t/yr Yamal LNG export plant in Russia.

Novatek and Shell decline to comment on whether cargoes will be offered on a fob or delivered basis.

The Yamal project is scheduled to begin the commissioning of the first of three 5.5mn t/yr trains in late 2017. The second and third trains will be commissioned in 2018 and late 2019, respectively.

Novatek concluded a supply contract with French gas firm Engie — formerly GDF Suez — for 1mn t/yr of LNG on 2 June. The LNG will also be supplied from Yamal and transshipped on a fob basis to Engie at France's 7.25mn t/yr Montoir terminal.

Yamal secured transshipment services of up to 8mn t/yr at an extension of Belgium's 7.2mn t/yr Zeebrugge terminal, in a deal signed with Belgian terminal operator Fluxys. The deal will offer Yamal LNG the opportunity to save on fuel costs through transferring cargoes from heavy icebreaker vessels, which are necessary for deliveries from Yamal, to conventional vessels.

The transshipment agreement also allows Yamal LNG to deliver supply to Asia-Pacific year-round. In the summer, supply to northeast Asia will be delivered along the northern route through the Russian Arctic.

Yamal LNG is owned by a consortium of Novatek with 60pc, Total with 20pc and Chinese state-owned energy firm CNPC with 20pc.