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Mitsui and JOGMEC enter Arctic LNG-2

Jul 02, 2019
2 min read
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Japan's Mitsui and Japan Oil, Gas and Metals National Corporation (JOGMEC) has signed a Sales and Purchase Agreement to acquire a 10 per cent participation interest of Russian operator Novatek's interest in the Arctic LNG 2 project.

The Arctic LNG 2 project envisages constructing three LNG trains at 6.6 million tons per annum each, using gravity-based structure (GBS) platforms. The Project is based on the hydrocarbon resources of the Utrenneye field.

“We welcome the consortium of Mitsui and JOGMEC as partners in our Arctic LNG 2 project,” said Leonid Mikhelson, NOVATEK’s Chairman of the Management Board. “Japan has 50 years of experience with importing LNG and is one of the largest LNG consuming countries. Moreover, Japanese companies have extensive experience in implementing LNG projects as well as marketing LNG around the world. The entry of Japanese partners into Arctic LNG 2 will contribute to its successful implementation”.

The deal was announced in the presence of Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe at the G20 meeting in Osaka.

Nicholas Browne, director, Asia Pacific Gas & LNG research at Wood Mackenzie, said: “Mitsui will undoubtedly be responsible for marketing of the 1.98 mmtpa of equity LNG from the 10 per cent stake. 

“Mitsui will look to sell some of the volumes within Japan. However, it may also look to trade and sell Arctic-2 volumes into the Atlantic basin. The strong backing of JOGMEC highlights that this is seen as a strategic investment by the Japanese government.”

Nikolai Novikov, Senior Research Analyst, Russia Upstream, at Wood Mackenzie, added: “Energy security considerations, the investment attractiveness of Arctic LNG-2 and improving Russo-Japanese relations have proved deciding factors in getting both Japanese state and private enterprise on board.”

Earlier this year, Total (10 per cent) finalised their entry in the project, while CNPC and CNOOC Ltd each took 10 per cent stakes earlier this year.