Yamal LNG Output, Shipping May Cost $36 Billion, Putin Says

The Russian government and companies behind a project to liquefy and ship natural gas from the Yamal Peninsula in the Arctic may need to invest at least 1 trillion rubles ($36 billion), Prime Minister Vladimir Putin said.

The OAO Novatek-led Yamal LNG project will also involve building a port with first loadings of liquefied natural gas due to start in 2018, Putin said at a meeting outside Moscow today.

“Yamal will get a modern LNG plant, transport infrastructure,” Putin said. “A new Arctic port, Sabetta, is planned.”

Yamal LNG plans to produce 5 million metric tons of fuel a year for export in 2016, before ramping up to an expected 15 million tons in 2018. Novatek, Russia’s second-biggest gas producer, is working on a specially designed fleet to take the fuel from the Arctic to Europe and Asia all year-round.

Total SA (FP) agreed in March to take a stake in the project, as Novatek may decide on other partners by the end of the year.

The deal for the French producer to acquire a 20.5 percent stake in Yamal LNG has been approved, Andrey Tsarikovsky, deputy head of the Federal Antimonopoly Service, told reporters separately today.

Investments in Yamal LNG may reach $15 billion to $20 billion, excluding spending on the tanker fleet required to ship the fuel from the icebound waters via the Arctic route, Novatek Chief Executive Officer Leonid Mikhelson said last month.

To contact the reporters on this story: Scott Rose in Moscow at rrose10@bloomberg.net Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net. Will Kennedy at wkennedy3@bloomberg.net

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