Gazprom announces pact with NCG, spurns Novatek
Thursday, May 18, 2017
Russia’s Gazprom has apparently rejected sharing its resources on the Yamal Peninsula with domestic rival Novatek.

Earlier this month, the state-owned giant announced it had signed a memorandum of intent (MoI) with RusGazDobycha, a subsidiary of Russian businessman Artem Obolensky’s National Chemical Group (NCG). Under the deal, the two firms will study the prospects of creating a joint venture to develop three of the four fields in Gazprom’s Tambey cluster in Yamal Nenets.

The memorandum was announced on May 5, just a day after Gazprom chief Alexey Miller met with Russian President Vladimir Putin to discuss exploration work at the sites. Miller noted that Gazprom was prepared to team up at the fields with a company “with competency in the field of gas liquefaction”. This was a clear nod to Novatek, the only other Russian firm with experience in LNG production.

Novatek, Russia’s second biggest gas producer, wants to use resources from the Tambey field group to support an expansion of its LNG export capacity in the region. Gazprom repeatedly spurned a partnership with Novatek, however, prompting the latter’s CEO Leonid Mikhelson to ask Putin to support the company’s bid late last year.

Gazprom bought subsoil rights to the North-Tambeyskoye, West-Tambeyskoye, Tasiyskoye and Malyginskoye fields in 2008 for 10.4 billion rubles (US$178 million) without an auction. According to Miller, the firm has performed 2,650 of seismic surveying and has drilled 14 wells at the site since then. Gazprom now believes that the four fields contain 6.7 tcm of natural gas under Russia’s A, B, C1, C2 and C3 reserves classification system.

It plans to submit fresh data to Russia’s Federal Agency for Subsoil Use (Rosnedra) either this year or in 2018. This may lead to the agency to upgrade its own resource estimate, which currently stands at 2.65 tcm.
 
Close partners
In its statement on May 5, Gazprom specified that the document signed with RusGazDobycha was for joint development of the North-Tambeyskoye, West-Tambeyskoye and Tasiyskoye deposits, but did not mention the remaining Malyginskoye field. The accord also envisages the pair working together at the Achimov and Valanginian deposits in the Nadym, Pur and Taz districts of Yamal Nenets. The aim is to use these resources to support petrochemical production in the region.

Gazprom and National Chemical Group are already collaborating on several fronts.

In April 2017, the two firms created RusGazAlyans, a joint venture to develop the Parusovoye, Severo-Parusovoye and Semakovskoye fields in Yamal Nenets. They plan to reach a final investment decision (FID) on development of the projects by 2019, with a view to launching commercial gas production two years later. A target peak output of 16.5 bcm per year is anticipated from the fields by 2030.

Obolensky gained full control of National Chemical Group in November last year, after buying a 49% stake from his long-time business partner Arkady Rotenberg, who is also a close ally of Putin. Rotenberg is the sole owner of Stroygazmontazh (SGM), one of Gazprom’s main three contractors. SGM has bagged several high-profile contracts from the gas giant in recent years, including three worth 39.8 billion rubles (US$706 million) for work on the Ukhta-Torzhok 2 pipeline earlier this year.
 
Still hope
The agreement between Gazprom and RusGazDobycha is a setback for Novatek, but the latter may still be able to secure resources from the Tambey group.

In 2012, Gazprom and Novatek signed a memorandum for the creation of a 75:25 joint venture to develop the North-Tambeyskoye, West-Tambeyskoye and Tasiyskoye fields – but the deal was never finalised. Since then, Gazprom has shown little desire to team up with its main rival in the domestic gas market.

The accord signed this month is only preliminary, though, and therefore does not bind Gazprom to any firm commitments to work with RusGazDobycha. As such, the door is still open for Novatek to take part in development of the Tambey cluster. Given the importance of Novatek’s activities in the region to Russia’s plans for LNG expansion, the government is likely to ensure, at the very least, that some of the fields’ resources are ring-fenced for Novatek.

The privately owned company operates the nearby Yamal LNG project, which is scheduled to launch its first 5.5 million tpy export train later this year. The terminal will be fed from Novatek’s South-Tambeyskoye field, located near to Gazprom’s cluster of deposits. James Henderson, an expert at the Oxford Institute for Energy Studies (OIES), estimates that Gazprom’s Tambey could support a further eight trains at Yamal LNG, in theory.
 

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