OVL-IOC-Petronet consortia in talks for stake in Yamal LNG

Written By Unknown on Senin, 09 September 2013 | 21.03

A consortium on ONGC Videsh Ltd, Indian Oil Corp (IOC) and Petronet LNG Ltd is in talks to buy about 9-10 percent stake in Russian natural-gas producer OAO Novatek's USD 20 billion Yamal LNG Project.

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The Indian consortia is sending a team of officials to Russia this month for negotiations for a stake in the project that will aim to make 16.5 million tonnes of liquefied natural gas (LNG) a year and start shipments in 2016, sources with direct knowledge of the development said.

OVL-IOC-Petronet were originally interested in taking up to 15 percent stake in the Yamal project, which also requires construction of an airport and port on the Arctic Ocean. But they will have to settle for a smaller stake after Novatek last week sold a 20 percent stake in the project to China National Petroleum Corp (CNPC).

Total SA of France had in March 2011 bought 12 percent stake in the project for about USD 4 billion. Since then, it has raised the stake to 20 percent. Novatek, which is now left with 60 percent of the venture, is ready to cut its holding to 51 percent if potential partners offer markets for the gas.

Sources said Petronet, which operates two LNG import facilities in Gujarat and Kerala, has been included in the consortium so as to give the seller the comfort of buying the liquid gas.

The Indian consortia is willing to buy 5 million tonnes a year of LNG from the Arctic project. Last week, CNPC pledged to purchase at least 3 million tonnes a year of LNG from Yamal. India's natural gas demand is projected to jump to 378.06 million standard cubic metres per day in 2016-17 from 242.66 mmscmd in 2012-13. Domestic supplies in 2012-13 were about 101.1 mmscmd and 44.6 mmscmd came through imported LNG, still leaving a vast unmet demand.

Domestic supplies of 156.7 mmscmd and planned LNG imports of 143 mmscmd in 2016-17 will be short of the demand, they said. Novatek, Russia's second-largest gas producer, plans to make a final investment decision on Yamal in the third or fourth quarter of this year. The Yamal LNG project is expected to comprise three LNG trains, each with a capacity of 5.5 million tonnes a year. The first train is planned to come online in late 2016, with the second and third due in 2017 and 2018, respectively.

Yamal LNG is based on feedstock resources from the South Tambeyskoye field, which contained proven and probable reserves of 907 billion cubic meters of natural gas as of December 31, 2012.



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