Indian consortium in talks for stake in Novatek’s Yamal LNG project

India has huge demand for LNG

CONTINUING its acquisition drive abroad, Oil and Natural Gas Corporation Limited’s overseas arm, ONGC Videsh Limited (OVL) along with Indian Oil Corp (IOC) and Petronet LNG Ltd will be sending a team to Russia later this month to explore possibility for...

buying stake in Yamal LNG project.

Russian natural-gas producer OAO Novatek's $20-billion Yamal LNG Project is likely to produce 16.5 million tonnes of liquefied natural gas (LNG) a year and start shipments in 2016. Media reports say the Indian consortium is in talks to buy about 9-10 percent stake in the Russian company.

It is reported that the Indian consortium was originally interested in buying 15-percent-stake in the Russian project. But after Novatek sold a 20-percent-stake in the project to China National Petroleum Corp (CNPC) last week and therefore the Indian consortia will have to settle for a lower stake. 

Both India and China are two major energy guzzlers and in order to meet the rising energy demand, both the countries are searching for overseas acquisition.
Earlier, Total SA of France had in March 2011 bought 12 percent stake in the project. Novatek is Russia's second-largest gas producer and it plans to make a final investment decision on Yamal in the third or fourth quarter of this year. As of 31 December 2012, South-Tambeyskoye Field ((Yamal LNG project) was estimated to contain 481.4 bcm of proved natural gas reserves and 13.4 mmt of proved liquid hydrocarbon reserves, says the Novatek website. 

The LNG plant will include three trains of 5 to 5.5 mmt annual capacity each as well as LNG storage facilities. The first train is expected to come online in late 2016, with the second and third due in 2017 and 2018. 

OVL recently said it would pay $2.64 billion to acquire a 10-percent-stake in a Mozambique gas field (offshore Rovuma Area 1) from Anadarko Petroleum Corp of the US. It is the fourth deal in one year for the oil and gas company, the company said in a statement. The OVL has thereby completed deals worth over $11 billion since September last year. The company, along with Oil India (OIL), had in June bought a 10-percent stake in the same block from Videocon Group for $2.475 billion.