Putin praises China and paves way for stronger Arctic energy deal

In his greetings to the Third Russian-Chinese Energy Business Forum on Monday, President Vladimir Putin started by praising the good relations Moscow has with Beijing.

“The relations of comprehensive partnership and strategic interaction between the Russian Federation and the People’s Republic of China are at an unprecedented high level,” the president said according to the text of the statement published on Kremlin’s portal.

Putin highlighted the energy cooperation and said it “has developed significantly in recent years.”

He pointed to pipelines across the Russian-Chinese border from Siberia, supplies of coal, Russian-designed reactors for two Chinese nuclear power plants and successfully implemented large-scale projects like the production of liquid natural gas in the Arctic.

With operation from December 2017, the Yamal LNG in Sabetta on the coast to the Ob bay is partly owned by China National Petroleum Corporation (CNPC) and China’s Silk and Road Fund together with Russia’s private Novatek and French Total.

China is also a major buyer of the gas shipped out from Yamal LNG along the Northern Sea Route.

“An effective mechanism for direct dialogue between companies in our countries operating in various sectors of the fuel and energy complex is the Russian-Chinese Energy Business Forum,” Putin said and stated he hopes the forum will help outline new promising forms of partnership for the benefit of our countries and peoples.

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A few hours later on Monday afternoon, Russia’s Deputy Prime Minister Aleksandr Novak said to Reuters that he expects Chinese banks soon to sign financing deals for Novatek’s Arctic LNG 2 project, the production plant for liquid natural gas from the Utrenneye field in the Gydan Peninsula, across the Ob bay from Sabetta.

The Arctic LNG 2 will have three LNG trains, with construction is being supported by Novatek’s huge Kola Yard north of Murmansk where assembly and installation of topside modules on large barges happen before being towed north to the port on the coast of the Gydan Peninsula.

Capital expenditure to launch the project at full capacity is estimated at $21,3 billion equivalent, according to Novatek.

Novatek shareholders earlier this year approved external financing of $11 billion for the Arctic LNG 2, Reuters writes.

Production is scheduled to start for the first train in 2023. Train 2 and 3 are planned to be put into operation in 2024 and 2025. 

Interfax on Monday reported that the natural gas company already has contracted almost all of its liquid natural gas to be produced at Arctic LNG 2 for delivery in 2023 and 2024. Each of the three trains will produce 6,6 million tons annually.