Millennium Post

Russia offers Indian cos stake in Yamal LNG project’s 2nd phase

Russia has offered Indian oil companies a stake in the second phase of Yamal LNG, the biggest project to produce liquefied natural gas (LNG) in the Arctic. The offer of stake in JSC Yamal LNG was made when Minister of State for Petroleum and Natural Gas (independent Charge) Dharmendra Pradhan visited St Petersburg last month, sources privy to the development said.

Petronet LNG, India’s biggest natural gas importer, is studying the offer, they said adding other state-owned firms like Indian Oil Corporation Ltd (IOCL) may join in later. Novatek OJSC, Russia’s second-biggest natural gas producer, had in 2013 offered a 9 per cent stake in the $27 billion Phase I of Yamal LNG project to a consortium of Petronet LNG, Indian Oil Corporation Ltd and ONGC Videsh Ltd (OVL).

But later ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), did not find the offer attractive and the Indian consortium backed out. Novatek stitched a consortium with China National Petroleum Corporation (CNPC) (20 per cent), Total of France (20 per cent) and China’s Silk Road Fund (9.9 per cent).

The Russian firm holds 50.1 per cent stake in the project which comprises development of the South-Tambeyskoye field, which has proven deposits of 1.3 trillion cubic meters of natural gas, and the construction of natural gas liquefaction plant (LNG) for producing 16.5 million tonnes of LNG a year by 2017. 

Now the company is planning a second phase and is offering a stake to Indian companies, sources said. 

They added that ONGC Videsh Ltd was previously interested in getting into the upstream part of the project, i.e. gas field development. Petronet LNG was keen to offtake liquefied natural gas.

ONGC Videsh Ltd, they said, may envisage interest if the stake is accompanied by some say in the upstream part. ONGC Videsh Ltd - Indian Oil Corporation Ltd -Petronet LNG were originally interested in taking up to 15 per cent stake in the Yamal project, which also requires construction of an airport and port on the Arctic Ocean. 

However, a smaller 9 per cent stake was offered to them after Novatek in September 2013 sold a 20 per cent stake in the project to China National Petroleum Corporation. Total SA had in March 2011 bought 12 per cent stake in the project for about $4 billion. Since then, it has raised the stake to 20 per cent.

Sources said that Petronet LNG, which operates two LNG import facilities in Gujarat and Kerala, has been offered the stake in phase II as it offers a ready buyer of gas. In Petronet LNG, Russia seeks a buyer that can take at least 5 million tonnes a year of liquefied natural gas from the Arctic project.

China National Petroleum Corporation had pledged to purchase at least 3 million tonnes a year of liquefied natural gas from phase I of Yamal project.
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