Russia on Tuesday started production at its second liquefied natural gas plant, Yamal LNG, with the aim of shipping the first cargo on Dec. 8 from the remote Arctic port of Sabetta.
Russia's No.2 gas producer Novatek (NVTK.ME)
owns a 50.1 percent stake in Yamal LNG. France's Total and China National Petroleum Corp each control 20 percent, while China's Silk Road Fund owns 9.9 percent.
Russia, seeking to produce more than 70 million tonnes of LNG per year in its remote Arctic regions, for now has just one operational LNG facility, run by Gazprom and co-owned with Shell on the Pacific island of Sakhalin.
Novatek said the first train was for 5.5 million tonnes of fuel to be delivered year round to Asian and European markets via the Arctic Ocean with ice-class tankers used. The overall capacity is set to reach 17.5 million tonnes with the last train of the project starting operation by the end of 2019.
The $27 billion plant has been commissioned "on time and on budget according to our FID schedule", said the firm's CEO Leonid Mikhelson, ranked the Russia's wealthiest man, according he Russian edition of Forbes.
Chinese banks put up more than $12 billion in financing in April while the project also has the backing of Russian and European banks and the Russia's National Wealth Fund, one of the country's two sovereign wealth funds.
Chief Financial Officer Mark Gyetvay told Reuters
in an interview in 2016 that Yamal's costs - extraction, liquefaction and shipping - were estimated at about $3 per million British thermal units (mmBtu), a measure used to calculate LNG prices.
The Yamal LNG consortium sees Asia as the biggest market for its gas in the long term. Shipments to China from Yamal should take about 18 days using the Northern Sea route down through the Bering strait that separates Russia from
President Vladimir Putin has said earlier the Northern Sea route would allow Russia to become the world's largest LNG producer.
By Denis Pinchuk