China National Petroleum Corp. bought a 20 percent stake in OAO Novatek’s $20 billion Yamal liquefied natural gas project, aiding the Russian gas supplier’s bid to raise financing.
Novatek and CNPC closed the deal for an undisclosed sum today on the sidelines of the G-20 Summit in St. Petersburg, Russia, the same city where they signed a preliminary accord on the acquisition earlier this year. CNPC had pledged to purchase at least 3 million metric tons a year of liquefied natural gas from the Arctic project.
“CNPC’s entrance in Yamal LNG is an important milestone for the project,” Chief Executive Officer Leonid Mikhelson said in an e-mailed statement. “We are pleased to welcome a new, strong partner who will contribute its capabilities and resources to the successful implementation.”
Novatek, Russia’s second-largest gas producer, plans to make a final investment decision on Yamal in the third or fourth quarter of this year. CNPC joins France’s Total SA, which has a 20 percent stake in the Yamal venture. Novatek has said it’s ready to cut its holding to as low as 51 percent.
Novatek, controlled by billionaires Leonid Mikhelson and Gennady Timchenko, is challenging OAO Gazprom’s export monopoly. The Russian government plans to meet this month on amending laws to allow exceptions to the monopoly for LNG, Deputy Prime Minister Arkady Dvorkovich said on Aug. 9.
Today’s sale is subject to regulatory approvals and expected to be completed by Dec. 1, according to the Novatek statement.