Sanctions or no sanctions, Leonid Mikhelson, Yamal LNG project manager and CEO of Novatek, the main shareholder in the project, says Yamal LNG is going ahead as planned. However, he doesn’t pretend there won’t be challenges, as he stated in a press conference:
“However, they will have to rely more on their own capital to finance it because of sanctions.”
Currently, 40% of the Yamal LNG project is equally divided between France’s Total and China’s CNPC.
Yamal LNG is a proposed liquefied natural gas plant at Sabetta, north-east of the Yamal Peninsula, Russia. The planned LNG plant will have three trains with a total capacity of 16.5 million tons of liquefied natural gas per year. The first train will be operational by the end of 2016, to be followed by second and third trains correspondingly by the end of 2017 and 2018.[
On July 29th, the European Union and the United States agreed on sanctions against Russia for its ongoing conflict with the Ukraine. The E.U. will not trade with financial institutions in Russia owned by the state, will not deal in arms or with certain exports to Russia. In addition, the E.U. says it will limit access to Russia of sensitive technologies that may aid it in the oil and gas industry. There are many projects, particularly those that involve joint ventures with Western companies that will be affected by these sanctions, but for the present, Yamal LNG seems at least somewhat insulated from these problems.
There is still substantial funding required for the project, which is likely to as much as double Russia’s natural gas production. Novatek is expected to look to Chinese financial institutions to raise funds. Rather than the U.S. or Europe, Novatek will look to the Asia-Pacific region for consumers of the natural gas.