INTERVIEW: Novatek to finalize Termokarstovoye deal with Total early 2011
Interview with Novatek Chief Financial Officer Marc Jetway
 MOSCOW, Feb 8 (PRIME-TASS) -- Russian natural gas producer Novatek plans to finalize the sale of 49% in the Termokarstovoye gas field to French oil and gas company Total by the end of 2010 or in early 2011, Novatek Chief Financial Officer Marc Jetway said in an interview with PRIME-TASS.
The acquisition of the stake in the field and consequently the payment will be done in stages, he added.
Novatek said February 4 that it has closed the deal to set up a joint venture to develop the Termokarstovoye gas field with Total.
All the necessary government approvals for the deal have been obtained, Jetway said. Explorations needed to be undertaken at the field and the decision on launching production is expected by the end of 2012, Jetway said.
“From our perspective it is an interesting relationship because it allows us to develop a field that today we probably would not have developed to the same extent, because we have other commitments to undertake,” he said. Total will pay for the majority of the project’s costs, which will make it possible to start production at the field, he said.
Speaking about Novatek’s role in the project, he said “we will retain 51% of the field. We will pay a portion of the cost. But Total will carry a portion of the cost until we go into production.”
In response to a question about production plans for 2010 and the next three years, Jetway said that it was difficult to predict the demand for gas and that the company’s priority was building up capacity.
“It is difficult to predict, to forecast what the demand will be, we try to move away from that and just invest capital to add capacity,” he said.
Novatek plans to expand its production capacity to 51 billion cubic meters of gas in 2010, Jetway said. The company plans to launch a third startup complex of the second stage at the Yurkharovskoye field located in the Yamalo-Nenets Autonomous District sometime in October–December, and is expected to have capacities enabling it to produce 51 billion cubic meters of gas by the end of 2010, Jetway said.
Novatek’s daily output amounts to 113 million–114 million cubic meters presently, which is the record production for the company, Jetway said.
“We’ve only been able to do that because demand has been relatively strong right now with the colder weather and we also see sort of renewed, all be it slow, economic activity pick up in the country. The only way to make that successful is to invest capital. All the capital we invested over last year to build capacity is being used 100%. So the plan is to continue investing capital,” he said.
In October 2009, Novatek reported an expansion of the Yurkharovskoye field’s second stage to 23 billion cubic meters, which increased the company’s total production capacities to 44 billion cubic meters.
Novatek produced 30.9 billion cubic meters of gas in 2008, according to earlier reports.
Speaking about the company’s development strategy up to 2020, Jetyway said that it was expected to be finalized in the next three–four months.
“Hopefully we will have that strategy out sometime in the next three–four months. Once we have that final, we will go to the market with a presentation of the strategy,” he said.
The Yamal LNG project, which envisages a construction of a liquefied natural gas (LNG) plant at the South Tambei field on the Yamal Peninsula, is obviously one of the big projects the company would be working on in the future, Jetway said.
To start work on the project Novatek must chose partners, Jetway said.
He called Russian natural gas giant Gazprom “one of the obvious partners” for the project.
Novatek may announce a short list of partners and other details for the Yamal LNG project in March, Jetway said.
“We are looking for a partner that has commercial, technological expertise, that has the ability to market LNG, and that has a strong balance sheet. We need to make sure that the partner is the right partner for us,” he said. There could be one or several partners for the project, he said.
“We are working closely with Sovcomflot for shipping opportunities, we work closely with Russian banks here on financing. We work very closely with the government to make sure that the project is done in reasonable time,” he said.
Novatek currently holds 51% in company Yamal SPG, which holds a license to explore and develop the South Tambei gas field, and plans to exercise its option to buy another 23.9% stake in the company.
The South Tambei field contains 1.256 trillion cubic meters of C1 and C2 category gas reserves. Novatek plans to start gas production at the field in 2015–2016, according to earlier reports.
End
08.02.2010 17:54
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