* Yamal LNG project to cost $27 bln in total
* Financing issues fully resolved - Novatek CEO
* Future LNG projects should not require state funds -
By Oksana Kobzeva
VLADIVOSTOK, Russia, Sept 5 Russia's Yamal LNG
project, to build the country's second gas liquefaction plant,
is on track and on budget with Novatek and its
partners having invested $18.5 billion so far, Novatek's CEO
The first phase of the project, in which Novatek is in
partnership with France's Total and China's CNPC and
the Silk Road Fund, is due to start operation some time next
year and Novatek's chief executive said it was 76 percent ready.
Russia is the world's biggest producer of conventional gas
after the United States but wants to increase its production of
liquefied natural gas (LNG), which currently accounts for less
than 5 percent of world output.
Investment in the Yamal project, which will require $27
billion in total, was at risk after Novatek came under Western
sanctions over Moscow's role in the Ukraine crisis, but the
project has since secured funding from Chinese and Russian
banks, as well from the Russian government.
"To date, we have resolved all issues related to Yamal LNG's
financing," Leonid Mikhelson, Novatek's chief executive and a
major shareholder, told reporters in comments cleared for
publication on Monday. "In my opinion, we should implement
similar projects on our own, not using (Russia state) budget
financing in the future."
The Yamal facility will have three production lines when it
is completed, each with an annual capacity of 5.5 million tonnes
In April, Yamal LNG signed loan deals with Chinese banks
worth over $12 billion. It also secured Russian state funds
worth 150 billion roubles ($2.3 bln) from a rainy day fund and
3.6 billion euros ($4 bln) from state-controlled Russian lenders
Sberbank and Gazprombank.
Russia currently operates just one LNG plant, on the Pacific
Island of Sakhalin, led by Gazprom, with an annual
capacity of around 10 million tonnes.
Sakhalin-2 plans to expand to add a third production line
with 5 million tonnes of annual capacity some time in the
future. The United States, Qatar and Australia, however, are
also all expanding LNG production.
Novatek, Russia's second biggest producer of conventional
gas, plans to commission its second LNG project, Arctic LNG-2,
by 2025 with planned LNG production of up to 16.5 million tonnes
Mikhelson declined to give a cost estimate for Arctic LNG-2
project and said that Novatek was not in a hurry to choose
partners for the project.
Japan Bank for International Cooperation (JBIC), which has
signed up to help finance the Yamal project, is also ready to
support the Arctic LNG-2 project, he said.
($1 = 64.7225 roubles)
($1 = 0.8958 euros)
(additional reporting by Olesya Astakhova; writing by Katya
Golubkova; editing by Dmitry Solovyov and Susan Fenton)