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Russian LNG Exporter Warns Against `Vilifying' Country's Gas

Updated on
  • Novatek CFO says LNG cargoes shouldn’t have ‘DNA attached’
  • Company sees no impact on its business from U.K. spat

Novatek CFO Sees No Reason for Vilifying Russian Gas Supply

Russia’s political tensions with Europe and the U.S. should not be a reason to denounce the nation’s energy supplies, which are just as essential for the global market as anyone else’s, according to liquefied natural gas exporter Novatek PJSC.

“We don’t understand why cargoes now have a DNA attached to them,” Mark Gyetvay, Chief Financial Officer for Novatek, said in an Bloomberg television interview with Guy Johnson and Matthew Miller.

“Why all of a sudden we got to this point when there is good and bad gas,” with “good gas coming from everywhere else and bad gas coming out of Russia,” the executive said Friday in London. “We’ve been vilified for delivering gas to the market.”

Yamal LNG shipping scenarios

The furor between Russia and the U.K. in the wake of the nerve-agent attack on British soil prompted Prime Minister Theresa May to retaliate by expelling Russian diplomats and seeking alternatives to Russian gas, including LNG produced by Novatek. This followed shipments earlier this year to the U.S., which drew attention because some of the LNG was produced at the Arctic plant that’s been under U.S. financial sanctions.

See also: Why the U.S. Is Buying Natural Gas From Russia: QuickTake Q&A

All cargoes are supplied by traders who choose the most profitable destination, this is how commodities markets work, Gyetvay said.

Yamal’s gas was sold free on board from the LNG plant “to a trader who then sold it off to another trader who took it to the market where they felt they could receive the highest netback,” he said.

Novatek, which started its $27-billion Yamal LNG plant in December in an environment of U.S. sanctions against Russia, doesn’t see any impact on its business “on a major degree” from the recent spat with the U.K., Gyetvay said. “We are a private company.”

See also: Putin Touts First Gas Delivery to U.S. Amid Sanctions Strife

Novatek, whose largest shareholders include Russian billionaires Leonid Mikhelson and Gennady Timchenko, as well as French energy giant Total SA, last year outlined plans for some $60 billion of investment to become a global force in the LNG market and the biggest producer of the fuel in Russia.

Europe is especially dependent on natural gas imports as its own production is rapidly declining. While the U.S. is eyeing the region and politicians are pushing more shale gas exports onto European markets, Russian pipeline gas has so far won competition economically, showing record-high volumes for two years in a row.

LNG from the Arctic region is also a low-cost source, Gyetvay said. That will help Novatek progress with its second LNG project in the region, Arctic LNG 2.

“Politics is an inevitable part of energy but it doesn’t drive market decisions,” he told Bloomberg News in London. “Politics aside, there’s strong interest in Arctic LNG 2, strong interest from key consuming countries, which will ultimately be driving decisions.”

(Updates to add map, CFO comment in last paragraph.)
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