China to get first Yamal LNG cargo as Russia says "thank you"

Elena Mazneva 10/27/2017

MOSCOW (Bloomberg) -- Russia’s Yamal LNG, set to be the world’s biggest Arctic producer of liquefied natural gas, plans to send its debut cargo to China as thanks for its support. 

The first recipient of the project’s super-chilled fuel will be China National Petroleum Corp. as this “is obviously a very symbolic point,” Mark Gyetvay, deputy CEO of Moscow-based Novatek PJSC, the project’s main shareholder, said Thursday in a conference call. He didn’t give a date for the shipment.

“It is our view that the first LNG tanker should be off-loaded by CNPC in recognition for their overall contribution to the project and the importance that the Asian-Pacific market represents as a key consuming region,” Gyetvay said.

The $27-billion Yamal development has advanced, despite concerns it would be hurt by U.S. sanctions levied against Novatek in 2014 after Russia annexed Crimea. Chinese lenders agreed to provide $12 billion to the project last year after CNPC bought a 20% stake in the venture. China’s Silk Road Fund holds 9.9%.

Yamal LNG may send its first cargo in November, according to the Russian Energy Ministry, as China’s LNG imports surge ahead of winter. The nation increased purchases of the fuel to a seasonal record last month as its biggest energy companies seek to bulk up supplies before colder weather boosts demand.

The Arctic plant, which is building three main LNG production lines with a fourth planned, is expected to reach full output capacity in 2019. Novatek owns 50.1% of the project, and Paris-based Total SA has the remaining 20% stake.

The French company was first to team up with Novatek on the Yamal project almost seven years ago. The project’s first tanker was named after Christophe de Margerie, Total’s former CEO who was killed in an airplane accident in Moscow in 2014.

“We are in a final stage of the commissioning process,” with the Christophe de Margerie tanker set to arrive at Yamal’s port of Sabetta soon, Gyetvay said.

While Russia’s customs office said earlier this month that Yamal LNG may send six cargoes by the end of the year, Gyetvay said that was a preliminary indication and wouldn’t necessarily “correlate” with the actual supplies.

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