Russia advances LNG race with multibillion-dollar Arctic project

Updated 05 September 2019

Russia advances LNG race with multibillion-dollar Arctic project

  • Novatek poised to become a global LNG leader as it seeks to rival Qatar in production of the super-chilled fuel

VLADIVOSTOK: The $21 billion Arctic liquefied natural gas (LNG)-2 project led by Russian private gas producer Novatek won a green light, the latest in a raft of new projects aimed at meeting a likely doubling of LNG demand over the next
15 years.

Arctic LNG-2 is expected to launch in 2023 and will aim to export 80 percent of its LNG to Asia, Novatek Chief Executive Leonid Mikhelson, Russia’s richest businessman according to Forbes magazine, said after the project’s partners signed a final investment decision (FID) at an economic forum.

At nearly 20 million tons per annum (mmpta) of LNG it would be largest single project to reach FID, according to Wood Mackenzie, and take total LNG volumes sanctioned this year to about 63 mtpa, beating the previous record of 45 mmtpa in 2005.

Arctic LNG-2 will be the third LNG project for Novatek, which hopes to match Qatar in production of the super-chilled fuel.

“Novatek is clearly driving home their ambitions to be a global LNG power house,” said Chong Zhi Xin, associate director of gas, power and energy at IHS Markit.

“It adds another 12 million tons to their portfolio on an equity basis. They are emerging as one of the largest LNG suppliers in
the market.”

The project’s equity partners include French energy producer Total, China’s National Petroleum Corp, CNOOC and the Japan Arctic LNG consortium, made up of Mitsui & Co. and state-owned JOGMEC, formally known as Japan Oil, Gas and Metals National Corp.

“This is an important project for Russia and follows our strategy to create capacities for LNG production,” Russian Energy Minister Alexander Novak said, adding that investments in the project had been set at $21 billion.

Japanese Industry Minister Hiroshige Seko said the project is one of the largest in the history of Japanese-Russian relations.

“It will unite Japan and Russia even more, as well as Europe and Asia. The Japanese
government will provide all necessary assistance for the realization of this project,” he said.

The Arctic LNG-2 project will include construction of three LNG trains with a capacity of 6.6 million tons per annum (mtpa) of LNG each and at least 1.6 mtpa of gas condensate, according to Novatek’s website.

Located on the Gydan peninsula in Russia, the project is expected to export its first LNG by 2023 with the second and third train to start up by 2024 and 2026, Total said in a statement.

It will help Russia reach its goal of producing 120 to 130 million tons of LNG a year in the coming years and raise its share in the global LNG market to up to
20 percent.

It follows FIDs announced from Canada, the US and Mozambique over the past year and plans to target Asian demand driven by major economies shifting toward greener fuel to combat pollution.

The project will benefit from extremely low cost gas, helping it compete against LNG from the US and Canada, said Wood Mackenzie analyst Nicholas Browne.

LNG from the project will also be delivered to international markets by a fleet of ice-class LNG carriers that will be able to use the shorter Northern Sea Route and the trans-shipment terminal in Kamchatka for cargoes destined for Asia and the trans-shipment terminal close to Murmansk for cargoes destined for Europe, Total said.

“Arctic LNG 2 adds to our growing portfolio of
competitive LNG developments based on giant low cost resources primarily intended for the fast growing Asian markets,” Total’s chief executive Patrick Pouyanné said in the statement.

The increase in supply from Russia and more intense
competition may push down LNG prices and help move Asia toward a more gas-based economy, said IHS Markit’s Chong. 


S&P 500 inches closer to record high

Updated 12 August 2020

S&P 500 inches closer to record high

  • US stock market index returns to levels last seen before the onset of coronavirus crisis

NEW YORK: The S&P 500 on Tuesday closed in on its February record high, returning to levels last seen before the onset of the coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.

The benchmark index was about half a percent below its peak hit on Feb. 19, when investors started dumping shares in anticipation of what proved to be the biggest slump in the US economy since the Great Depression.

Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second quarter earnings season have allowed all three of Wall Street’s main indexes to recover.

The tech-heavy Nasdaq has led the charge, boosted by “stay-at-home winners” Amazon.com Inc., Netflix Inc. and Apple Inc. The index was down about 0.4 percent.

The blue chip Dow surged 1.2 percent, coming within 5 percent of its February peak.

“You’ve got to admit that this is a market that wants to go up, despite tensions between US-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.

“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”

Aiding sentiment, President Vladimir Putin claimed Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval’s speed has concerned some experts as the vaccine still must complete final trials.

Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with US cases surpassing 5 million last week.

Also in focus are Sino-US tensions ahead of high-stakes trade talks in the coming weekend.

“Certainly the rhetoric from Washington has been negative with regards to China ... there’s plenty of things to worry about, but markets are really focused more on the very easy fiscal and monetary policies at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Financials, energy and industrial sectors, that have lagged the benchmark index this year, provided the biggest boost to the S&P 500 on Tuesday.

The S&P 500 was set to rise for the eighth straight session, its longest streak of gains since April 2019.

The S&P 500 was up 15.39 points, or 0.46 percent, at 3,375.86, about 18 points shy of its high of 3,393.52. The Dow Jones Industrial Average was up 341.41 points, or 1.23 percent, at 28,132.85, and the Nasdaq Composite was down 48.37 points, or 0.44 percent, at 10,919.99.

Royal Caribbean Group jumped 4.6 percent after it hinted at new safety measures aimed at getting sailing going again after months of cancellations. Peers Norwegian Cruise Line Holdings Ltd. and Carnival Corp. also rose.

US mall owner Simon Property Group Inc. gained 4.1 percent despite posting a disappointing second quarter profit, as its CEO expressed some hope over a recovery in retail as lockdown measures in some regions eased.

Advancing issues outnumbered decliners 3.44-to-1 on the NYSE and 1.44-to-1 on the Nasdaq.

The S&P index recorded 35 new 52-week highs and no new low, while the Nasdaq recorded 50 new highs and four new lows.