Russia’s Novatek has given the first indication of the sailing times for LNG carriers shipping cargoes from its Arctic production facilities via two newly ordered transshipment vessels.
The two floating storage units will be sited at either end of the Northern Sea Route.
In a presentation during an LNG webinar organised by DMG events, Novatek chief financial officer Mark Gyetvay presented a slide that showed that it would take 12 days to complete a round trip from the Yamal and Gydan peninsulas to the LNG FSU planned for Ura Bay near Murmansk.
Voyage times to northern Europe from the Ura Bay unit were shown as 16 days.
For vessels sailing to the eastern FSU at Bechevinskaya Bay on the Kamchatka Peninsula, the round trip would be 28.5 days. An onward round-trip sailing to Japan from the unit was shown as 14 days.
Maximum use
This month Russia's state leading transport company GTLK ordered the two 360,000-cbm LNG FSUs at DSME in South Korea for delivery in 2022.
Novatek plans to maximise the use of its specialised Arc7 LNG carrier fleet by shuttling cargoes from its Arctic production to the FSUs, where conventional LNG tonnage could them load cargoes for onward shipment.
Gyetvay's visual also showed the round trip sailing days for direct voyages without transshipment. From Yamal and Gydan to Europe this was listed as 20 days while the round trip to China was recorded at 38 days, compared with 65 days via the Suez Canal.
Referencing this year's early transit of the NSR by two Arc7 LNG carriers, Gyetvay said logistics are extremely important for Novatek’s Arctic LNG production plans.
The CFO said Novatek’s Yamal LNG plant produced 18.4m tonnes of LNG in 2019 and has a good first quarter 2020 with the plant running at 122% of its nameplate capacity.
He said Novatek plans to commission its 1 million tonnes per annum (mtpa) train 4 for Yamal LNG by the end of this year and is continuing to work on its next up project the 19.8-mtpa Arctic LNG 2.
He said the company’s 20-mtpa Arctic LNG 1 is expected to come on stream in the 2025-2030 period while Novatek’s Arctic LNG 3 is still in an early exploration stage
“We are anticipating we should be able to deliver up to about 70 million tonnes [per annum] by 2030," he said.
Aggressive outlook
Gyetvay detailed that Novatek has earmarked 80% to 85% of its production for the Asia-Pacific market and 15% to 20% to Europe.
He admitted that the company is “a little more aggressive” in its LNG demand outlook than others. But he said: “We believe the market will reach close to 700 mt [per annum] in early 2030, rather than 2040.”
Gyetvay said one of the main problems Novatek sees is the significant decline in expected final investment decisions (FIDs) for projects.
He said about 230m to 235m tonnes of expected FIDs are being delayed with some marginal projects likely to be cancelled.
The Novatek executive said this will cause a supply deficit from 2025 onwards.
He said that the company thinks that by 2025 this will stack up as an LNG supply deficit ranging from 50 mtpa in a low case scenario to 90 mtpa.
By 2030, if FIDs are not taken, Novatek believes this will rise to between 175 mtpa and 210 mtpa.
He said the market needs new supply from all regions to meet future demand, naming the key five areas as Australia, Russia, Qatar, the US and incoming supplier Mozambique.
