Gas giants with Yamal deal

Novatek's Leonid Mikhelson and Gazprom's Aleksey Miller find common ground in Yamal.

Gazprom long negotiated with Novatek over an ownership stake in the Yamal LNG project. Now the company instead decides to buy a huge portion of gas from the plant.


In a deal signed during the recent St Petersburg Economic Forum, Gazprom commits itself to buy an annual 3 million tons of LNG from the Yamal plant.

The deal has a 20 year time frame and the LNG will be shipped to Western Europe and from there further to the Asian market, and first of all to India.

«This deal significantly strengthens the long-term LNG engagement of Gazprom, company leader Aleksey Miller says in a press release.

For Novatek, the deal means that the company has secured contracts for the lion’s share of the Yamal LNG resources. From before, Novatek has signed delivery contracts with Total (4 mill ton/year), Gas Natural (2,5 mill ton/year), CNPC (3 mill ton/year) and Novatek Gas & Power (2,86 mill ton/year).

The Yamal LNG plant will have a capacity of 16,5 million tons per year. It is based on the resources of the nearby South Tambey field. 

The deal comes after the two gas companies in 2012 had a long round of negotiations over a project partnership. The cooperation was to include the establishment of a joint venture which was to develop several of the rich gas fields in the Yamal Peninsula. Those plans soon crashed however, and Novatek subsequently together with Rosneft openly challenged Gazprom’s export monopoly. In 2013, a Russian legislative amendment gave Novatek the right to independently export LNG.

As previously reported, Novatek intends to export a significant share of the Yamal LNG through the Northern Sea Route and has ordered a series of specially designed tanker for the operations.