Marginal cost of russian LNG to China

[Tomasz + 1,608]

I absolutely believe that the text below on the oilprice.com portal is one of the most important news on the global gas market recently.
If the data provided by the president or vice president of Novatek are true, I advise you to pay attention to the consequences of these numbers.

The president of Novatek has determined the total marginal cost of gas production, gasification and transport of gas by gas tanker from northern Russia to China at $ 3 per mbbtu, i.e. about $ 110 per 1,000 m3, which is even less than the cost of Gazprom's gas for Europe, which is estimated at 100-110  via Nord Stream I  , but via Ukraine as $ 140-150 per 1,000 m3.

This has a huge impact on the energy balance of Russia and Nord Stream II, which also uses the Yamal fields - the same ones that Novatek uses for the production of LNG.

https://oilprice.com/Energy/Natural-Gas/Russian-Gas-Giant-Novatek-Presents-Answer-To-US-Shale.html

Edited May 12, 2021 by Tomasz

[Tomasz + 1,608]

A  comment below article on oilprice.com

Quote

The Arctic is Russia’s ‘Wild West’ to borrow a phrase from American history. President Putin has long ago recognized the great importance of the Arctic for the Russian economy and the Russian oil industry. That is why he has been pouring billions of dollars into the region. Thanks to the Arctic, Russia will maintain its position as the world’s energy superpower throughout the 21st century.

Not only does the Arctic have huge gas and oil reserves estimated at 35.7 trillion cubic metres (tcm) almost equivalent to Russian current proven gas reserves and 16.86 billion barrels of oil and condensate (bb), its economic development will give a huge boost to the Russian economy.

For instance, Rosneft’s Vostok project which started in November 2020 will on completion employ 400,000 workers, create 15 new industrial towns, and build 800 km of new pipelines. Furthermore, harbours will need to be built including at least 12 ice-class super oil tankers that can ensure access even during harsh winter seasons when the sea is covered with ice. It will also witness the build-out of the Northern Sea Route (NSR) as the primary transport route to monetise these resources in the global oil and gas markets, especially to Russia's main economic and geopolitical partner, China. Rosneft is projected to export some 602,000 barrels a day (b/d) from the Vostok project by 2024 rising to 2.0 million barrels a day (mbd) by the end of the decade.

Russia’s number two gas producer Novatek will launch the first of three production lines of its LNG-2 project in 2023 with around 40% of the LNG plant currently completed. The Arctic LNG-2 project will have three major LNG production plants (trains) of 6.6 million tons per annum (mtpa) each, totalling 19.8 mtpa, and a cumulative gas condensate production capacity of 1.6 mtpa. This will complement the continued progress at Novatek’s original LNG project at Yamal LNG-1

Novatek plans to build out its LNG export capacity up to 70 mtpa by 2030. This, in turn, dovetails into Russia’s plans for LNG production of 80-140 mtpa by 2035, which would be greater than that of the world’s two largest producers Qatar and Australia. Moreover, it will be possible to deliver LNG into northeast Asian markets on a sustained basis for ‘a little over’ $3 per million British thermal units (MMBtu).

Furthermore, Novatel partners in the Arctic LNG-2 project have now also concluded 20-year deals to take LNG from the plant. The sales agreements will cover total LNG production from the facility as from when that begins in earnest in an expected 2023.

Novatel achievements are all the more important coming against tough US sanctions on Russia. The company hasn’t only managed to develop homegrown state-of-the-art technology but all secured all the financing for its projects from Russian and foreign sources.