Technip and JGC win Yamal LNG EPC contract
The Russian Novatek and the international oil company (IOC) Total from France have selected, through their joint venture JSC Yamal LNG, the consortium made of Technip from France and JGC from Japan to build the liquefied natural gas (LNG) plant of their Yamal project.
For the Yamal project, the natural gas should come from the South Tambeyskoye field in the northwest of the peninsula.
From these reserves, they expect to produce 90,000 boe/d at plateau production.
– Novatek 80%
– Total 20%
Yamal project to require $20 billion capital expenditure
From these conclusions, the Yamal gas field development project is estimated to require $20 billion capital expenditure including:
– Gas gathering system
– Condensate processing unit
– Offshore export terminal
– Transportation infrastructure with highways and aiport as only the railway is crossing the Yamal peninsula for now.
Among all these packages to be awarded by Novatek and Total for engineering, procurement and construction (EPC) contracts, the consortium made of Technip and JGC won the Yamal LNG plant, the master piece of the Yamal project.
Yamal LNG Plant capacity revised upward from FEED
Novatek Yamal LNG, a strategic project for Russia
In Russia, since the re-election of President Poutine, the Yamal project has been declared of national interest, thus to be implemented on fast track.
As a result Gazprom had to renegotiate downward its so called take or pay contracts with European partners.
For these reasons, Russia anticipated the market changes in shifting its pipeline projects from west to east toward China and Japan.
With China the discussions to close the gap between the $250 per thousand cubic meter proposed by Chinese and the $300 requested by Russian made significant progress in March during the visit of the Chinese President Xi Jinping to Kremlin.
A solution could take place in 2013 on 38 billion cubic meters of gas to be exported per year from Russia and the construction of a $25 billion export pipeline to China.
In 2012, Japan imported 87.5 million tons of LNG for an amount of $64 billion damaging heavily its trading balance.
So far Japan is buying gas based on long term contracts called Japanese Crude Cocktail (JCC) to secure its supply despite the short term fluctuations.
Indexed on a basket of crude oils from different sources, the resulting price in Japan is about 6 times higher than in Henry Hub spot market in USA.
Therefore Japan is now working on establishing a spot market for the gas in its Tokyo Commodity Exchange.
This new trading facility could be in place on the next two years affecting directly the way to sell gas to Japan.
In this context Russia is willing to speed up all its LNG projects such as Yamal LNG and Vladivostock LNG.
Well in progress the Vladivostock LNG project meets some local difficulties with environmentalists because the pipeline to supply it should cross sensitive wild areas.
This environmental challenges may cause some delay to the Vladivostock LNG project.