Technip, JGC win tender to build Russian Yamal LNG plant

Moscow (Platts)--1 Apr 2013 104 pm EDT/1704 GMT

A consortium including France's Technip and Japan's JGC Corporation have won a tender to construct the Novatek-led Yamal LNG project in northern Russia, project operator Yamal LNG said in a statement Monday.

The tender covers "engineering, procurement, supply, construction and commissioning" of the project, which envisages three trains, with an annual liquefaction capacity of 16.5 million mt. The Technip/JGC Corporation tender was one of three submitted to Yamal LNG, a joint venture between Russia's largest independent gas producer Novatek (80%) and France's Total (20%).

Novatek has not ruled out attracting new partners to the project.

"The basic terms agreed by the successful consortium are consistent with the existing schedule for launch of the project," the statement said, providing no further details.

Yamal LNG is expected to have a first, 5.5 million mt/year LNG train operational by the end of 2016, to be followed by second and third trains of similar capacity by the end of 2017 and 2018, respectively.

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In mid-March Yamal LNG said that Russian authorities had granted the project all the necessary permits for work on the project to begin, including approval of design documentation and a construction permit. A final investment decision for the project has yet to be taken, but is expected later this year.

Financing and future supply contracts for the project are said to be subject to changes to Russian legislation covering LNG exports.

Under the current law only Gazprom has the right to export gas, including LNG. Recently, the Russian authorities have been considering changing the law, after Novatek requested permission to export LNG directly. It currently has an agency contract with Gazprom for exports. Novatek wants to sign supply contracts for future exports from the project during the second quarter, but these agreements are subject to the legislation being changed.

In early February, Russian daily Izvestiya reported that the consortium of banks that is organizing the funding for Yamal LNG plans to seek only up to $5 billion if the law is not changed, citing sources in the energy ministry. If the law is amended the consortium, which comprises France's Societe Generale, Russia's Gazprombank and Sberbank plans to seek finance of up to $18 billion.

Yamal LNG is based on the resources of the South-Tambeiskoye field, which includes proven and probable reserves of 907 billion cubic meters of natural gas, as of December 31, 2012, under PRMS standards.

--Rosemary Griffin, --Edited by Jonathan Dart,

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