Russian Contracted LNG Supplies Three Times Cheaper Than Asia, Europe Prices - Novatek

Faizan Hashmi Published October 18, 2021 | 07:58 PM

The supplies of liquefied natural gas (LNG) produced from Russian gas giant Novatek's Yamal LNG terminals under long-term contracts are about three times cheaper than spot prices on the Dutch TTF index in Europe and the Asian JKM index, Novatek CEO Leonid Mikhelson said on Monday

BELOKAMENKA (UrduPoint News / Sputnik - 18th October, 2021) The supplies of liquefied natural gas (LNG) produced from Russian gas giant Novatek's Yamal LNG terminals under long-term contracts are about three times cheaper than spot prices on the Dutch TTF index in Europe and the Asian JKM index, Novatek CEO Leonid Mikhelson said on Monday.

Spot gas prices on the Dutch TTF index, the key European hub, for contracts with delivery on Monday, are trading at about $1,081 per thousand cubic meters. In Asia, the JKM index stood at $1,307 per thousand cubic meters, as of October 15.

"Long-term contracts are commercial confidentiality. But... almost 75% of (our LNG supplies) went to the Asia-Pacific Region's (APR) market and nearly nothing to Europe. Even some 80% went to the (Asia-Pacific Region) markets this year, to date. And long-term contracts are two-and-a-half or three times cheaper than TTF and JKM (prices)," Mikhelson told a briefing.

This year, the supply of LNG from Yamal via the Northern Sea Route to Asia will increase by 30%, hitting a record high, the CEO said.

Additionally, Mikhelson said that Novatek expected an increase in the LNG production under the Yamal LNG project to more than 19 million tonnes in 2021 and to more than 20 million in 2022, given the commissioning of the fourth train, which is already working but not at full capacity.

The large-scale Yamal project launched in 2017 envisions building infrastructure to produce, liquefy and ship natural gas from the Yuzhno-Tambeyskoye field located in the Yamalo-Nenets Autonomous Area. The project was created as a joint venture of Novatek, the main shareholder, Total, the China National Petroleum Corporation and the Silk Road Fund.

The project has already built three production lines with an annual capacity of 5.5 million tonnes of LNG each and a fourth line with a capacity of 1 million tonnes per year.