Regional LNG: Gazprom, Yamal sign 3m tpa LNG supply deal

By Romel S. Gurky

Russia?s Gazprom Group through its subsidiary Gazprom Marketing & Trading Singapore has signed a heads of agreement with Yamal Trade for the supply of up to 3 million tons per annum of LNG from the Yamal LNG project.

Gazprom said in a statement received Thursday that the agreement was signed on May 23 by Alexey Miller, Chairman of the Gazprom Management Committee, and Leonid Mikhelson, Chairman of the NOVATEK Management Committee. NOVATEK is the controlling shareholder of the Yamal LNG project.

The document will be effective for a period of over 20 years. LNG will be supplied under FOB (free on board) terms in a transfer point of Western Europe to be further delivered to Asia-Pacific markets, primarily to India. The price will be determined using the formula with oil indexation, the statement explained.

"This Heads of Agreement will significantly reinforce the long-term LNG portfolio of Gazporm. It is an additional way to expand the global trade and use our own fleet of LNG carriers," said Miller.

"It is another crucial step in implementing the Yamal LNG project. As regards LNG contracting, all the necessary conditions are provided for the successful launch of project financing," said Mikhelson.

The Yamal LNG project envisages the construction of an LNG plant with an annual capacity of 16.5 million tons, with natural gas to be delivered from the Yuzhno-Tambeyskoye field in Russia. The field's proven and probable gas reserves amount to 927 billion cubic meters. LNG production will start in the end of 2017. The project operator is Yamal LNG, with NOVATEK holding 60 per cent, Total - 20 per cent, and CNPC - 20 per cent in the company. Yamal Trade is a 100 per cent subsidiary of Yamal LNG.

Editing by Reiner Simanjuntak