Novatek Moves Closer Toward FID on Arctic LNG 2

The Russian independent will likely sell an ownership stake to an additional partner in the coming weeks, joining Total, CNOOC, and CNPC. FID is expected to take place later this year.


Novatek, Russia’s largest independent gas producer, has made significant strides toward a final investment decision (FID) on its second major LNG project in the Arctic.

Reuters quoted Novatek CFO Mark Gyetvay as saying that, while it does not have a specific date set for FID, the company aims to make the decision in the third quarter of this year, and that it has contracted 75% of the construction and materials for the project already. Novatek is close to finalizing the ownership structure for the project, having sold 10% to Total in February and additional 10% stakes to CNPC and CNOOC last month.

The company will likely sell another 10% to a third partner before FID, allowing it to maintain a 60% stake in the project. Several media outlets have speculated Saudi Aramco’s interest in investing. The two companies previously signed a cooperation agreement last year to collaborate on natural gas projects, including LNG.

The Arctic LNG 2 project follows Yamal LNG as Novatek’s second foray into the Arctic. Unlike Yamal, which was constructed onshore, Arctic LNG 2 will employ gravity-based structure platforms, engineered offshore platforms that will be towed into place and intentionally sunk in shallow waters. Novatek awarded engineering and construction contracts for the platforms in December to a joint venture between Saipem and Renaissance.

Construction on Arctic LNG 2 is scheduled to begin this summer, and the first train is expected to come online by 2023, though that is subject to change: The Financial Times previously reported that Novatek may push to launch the project earlier in anticipation of potential supply shortages in the 2020s.