MOSCOW (MRC) -- Chinese giant Sinopec is in talks to take a stake in Novatek’s Yamal liquefied natural gas project, a report has claimed, said Upstreamonline.
A formal deal between the pair could be signed as early as next week, Reuters reported, citing an unidentified source with knowledge of the situation.
Novatek currently has an 80% stake in the project on the Yamal peninsula with French supermajor Total in for the other 20%.
In late May Gazprom axed its plans to take a working interest in Yamal to develop three gas fields. Last year, Gazprom and Novatek signed a memorandum of understanding on joint co-operation to tap the three deposits, with the independent player getting a 25% stake in the planned joint venture.
Gazprom still holds a 10% stake in Novatek, which is lobbying the government to allow unrestricted LNG exports from South Tambey, bypassing Gazprom’s monopoly.
Also last month, Novatek commissioned France’s Technip to carry out an eight-month open book exercise to come up with a cost estimate and plans to execute the project, so as to make a final investment decision.
The Yamal facility will have an annual production capacity of 16.5 million tonnes and will be based on the resources of the South Tambey gas condensate field located on Russia’s Yamal Peninsula.
South Tambey’s proven and probable reserves are estimated at about 1.3 trillion cubic metres of gas.
In 2011, the Novatek and Total joint venture contracted CB &I Lummus of the US to conduct preliminary front end engineering and design work.
As MRC wrote previously, ConocoPhillips had joined up with Sinopec to explore for shale gas in China as the country grapples with the best way to exploit its potentially significant unconventional resources. This marks the official entrance of a third major international oil company into China's shale gas industry. Shell signed a similar agreement in 2009 with PetroChina before it green-lighted a more formal production sharing contract in March. Chevron signed a joint study agreement with Sinopec in April 2011 and began initial drilling in the first quarter. Other international oil majors such as BP and Total have said they are studying similar agreements, but have yet to announce any partnerships.
MRC