now loading...
Wealth Asia Connect Treasury & Capital Markets Europe ESG Forum TechTalk
Asia Connect
Chinese banks, JBIC back €9.5 billion loans for Arctic LNG 2
Debt package completes required external funding for Russian project
Michael Marray 8 Dec 2021

The Arctic LNG 2 project in Russia has signed €9.5 billion (US$10.72 billion) worth of loan agreements, with strong support from China and Japan. The project involves the construction of three LNG liquefaction trains of 6.6 million tonnes per annum each, as well as cumulative gas condensate production capacity of 1.6 million tonnes per annum.

The sponsors are Novatek (60%), China National Petroleum Corporation (10%), China National Offshore Oil Corporation (10%), TotalEnergies (10%) and a consortium of Mitsui & Co and Japan Oil, Gas and Metals National Corporation (Jogmec, 10%).

Chinese financial institutions, including China Development Bank and Export-Import Bank of China, signed credit facility agreements totalling €2.5 billion, Novatek says. Those from the Organization for Economic Co-operation and Development (OECD) member-countries signed credit facility agreements totalling €2.5 billion, including Japan Bank for International Cooperation (JBIC) and other lenders insured by export credit agencies.

Financing to be provided by a syndicate of Russian banks will total €4.5 billion under an agreement signed earlier. These include PJSC Sberbank, Gazprombank and its subsidiary Bank GPB International, State Development Corporation VEB.RF, and Bank Otkritie Financial Corporation.

The financing is for up to 15 years. The debt package completes the required external funding for the project.

The Utrenneye field is the resource base for Arctic LNG 2. The field is located on the Gydan Peninsula, approximately 70 kilometres across the Ob Bay from Yamal LNG.

Novatek is the largest independent natural gas producer in Russia, and in 2017 entered the global LNG market by launching the Yamal LNG project.

Vietnam deal

On December 2, during an official visit to Russia by Vietnamese President Nguyen Xuan Phuc, Novatek and PetroVietnam Power signed a cooperation agreement on LNG and power projects in Vietnam. Parties to the agreement intend to cooperate on LNG infrastructure projects, with the view to meeting the growing demand for electricity in Vietnam.

“Vietnam's electricity consumption has been growing at an average annual rate of 10% over the past ten years, and Novatek is ready to meet this growing market’s needs,“ says Novatek chairman Leonid Mikhelson. "We intend to become a reliable partner for Vietnam in realizing its announced goals of phasing out coal-fired power generation, and facilitate the country's transition to the clean energy of natural gas. This is in line with our strategy to expand our presence in the Asia-Pacific gas markets.”

Novatek‘s upstream activities are concentrated mainly in the Yamal-Nenets Autonomous Region, which is the world’s largest natural gas producing area. It accounts for about 80% of Russia’s natural gas production and 15% of the world’s.

Novatek shares are listed on the Moscow Exchange and the London Stock Exchange. 

Conversation
Mathew Kathayanat
Mathew Kathayanat
head of product, Asia Pacific securities services
Deutsche Bank
- JOINED THE EVENT -
Webinar
Unlocking the value of automation and AI in asset management
View Highlights
Conversation
Peng Zhang
Peng Zhang
group treasurer
ZTE
- JOINED THE EVENT -
Webinar
Renminbi in the post-Covid future
View Highlights