China-Russia Yamal natural gas project starts operation

Russian President Vladimir Putin said on Friday that Russia was ready to sell gas to Saudi Arabia after he launched the first loading of liquefied natural gas (LNG) at the Novatek-led Yamal LNG project in the Arctic.

Yamal LNG, which is 20 percent owned by France’s Total, aims to help Russia double its share of the global LNG market by 2020 from about 4 percent now. Qatar is the biggest LNG exporter, with a 30 percent market share.

Chinese banks lent more than $12 billion, while Russia provided 150 billion rubles ($2.5 billion) from a rainy day fund and 3.6 billion euros ($4.2 billion) from state-controlled Russian lenders Sberbank and Gazprombank.

More than 95 percent of output from Yamal LNG for the next 20 years or so has been sold, mostly to the Asia-Pacific region.

Until the $27-billion plant was built, Russia had one LNG plant, known as Sakhalin-2, controlled by Gazprom. Shell holds a 20 percent stake in the project on the Pacific island of Sakhalin. It produces almost 11 million tons a year.

Gazprom has a monopoly on Russian gas exports by pipeline, but Novatek secured the right to ship LNG abroad.

Novatek is planning another project, known as Arctic LNG, on the Gydan peninsula. Mikhelson previously said Russia might produce more than 70 million tons of LNG per year from its remote Arctic regions.

Alongside Novatek and Total, other shareholders in Yamal LNG are China’s CNPC with 20 percent and the Chinese Silk Road Fund with 9.9 percent.

The first phase of the project was completed in December. Other phases are due to onstream in 2018 and 2019. It will eventually has a total capacity of 17.5 million tons a year.